UNIVERSITY  OF  CALIFORNIA 

AT   LOS  ANGELES 


GIFT  OF 

Charles  H.   Titus 


Library 

Graduate  School  of  Business  Administration 

University  of  California 

Los  Angeles  24,  California 


X  • 


MINER  AND  KL.WELL.  SERIES 


INTRODUCTORY  COURSE 

ILLUSTRATING  THE  JOURNAL  METHOD  OF 
CLOSING  THE  LEDGER 


BY 

GEORGE  WiMINER 

AND 

FAYETTE  H:  ELWELL,  A.B.,  C.P.A. 

PBOFESSOK   OF  ACCOUNTING,  UNIVERSITY    OF   WISCONSIN 


GINN  AND  COMPANY 

BOSTON    •    NEW   YORK     •    CHICAGO     •     LONDON 
ATLANTA     •    DALLAS    •    COLUMBUS     •    SAN   FRANCISCO 


COPYRIGHT,  1912,  1916,  BY 
GEORGE  W.  MINER 


COPYRIGHT,  1918,  BY 
GEORGE  W.  MINER  AND  FAYETTE  H.  ELWELL 


ALL    RIGHTS    RESERVED 
318.3 


gftt   gtfremtnm  j>re« 

GINN  AND  COMPANY-  PRO- 
PRIETORS •  BOSTON  •  U.S.A. 


PREFACE 

The  modern  business  world  demands  of  its  employees  economy  and 
efficiency,  and  the  commercial  training  in  our  schools,  to  be  successful, 
must  meet  this  demand  of  the  business  world  by  texts  whose  value 
is  educational  as  well  as  practical.    Such  a  text  the  authors  have  tried 
to  furnish  in  this  volume.     Their  aim  has  been  an  elementary  book 
which  shall  present  a  simple,  practical  study  of  the  basic  facts  of  book- 
keeping in  a  manner  that  will  command  the  interest  of  the  pupil  and 
5   that  will  impress   upon   his   mind   the   methods   and   practices   of  the 
-   office  as  well  as  the  duties  and  technical  knowledge  and  vocabulary 
'   of  the  bookkeeper  and  the  accountant.    The  grading  and  development 
.   of  the  work,  its  classification,  the  terms  used,  and  the  forms  adopted 
|    all  have   the   same   aim,  —  the   making   of   an   efficient,  well-informed 

bookkeeper. 

P  To  apply  a  principle  is  of  far  more  practical  value  than  the  ability 
w  to  define  it,  and  in  this  text  principles  are  described  and  applied  by 
**  the  pupils  before  they  are  formally  defined  for  them.  This  inductive 
^  method,  characteristic  of  the  entire  book,  stimulates  the  pupil  to  think 
for  himself  and  to  cultivate  the  self-reliance  and  independence  so  univer- 
^  sally  demanded  of  him.  The  numerous  exercises  and  illustrations  used 
*-  in  the  approach  to  a  given  subject,  and  the  many  and  varied  reviews 
£  and  problems,  are  positive  factors  in  appealing  to  and  developing  this 
J*  in  dependence. 

As  a  basis  for  the  elementary  work,  the  authors  have  adopted  the 

pupil's  own  knowledge  of  simple  business  transactions,  —  the  exchange 

5  of  values  with  which  he  is  already  familiar  in  the  buying  of  many  of 

the  articles  used  in  the  home.     Thus  the  new  subject  is  approached 

with  confidence  through  well-known  operations. 

A  number  of  sets  are  arranged  for  business  practice  which  may  be 
carried  out  as  fully  as  the  instructor  desires ;  for  since  all  of  this 
work  is  optional,  it  may  be  fitted  to  the  needs  of  the  individual  class. 
The  business  practice  may  be  omitted  in  any  set  at  the  discretion  of 
the  instructor. 

The  introduction  of  a  retail  set  in  which  a  cash  journal  is  used, 
and  of  a  set  presenting  departmental  bookkeeping,  add  to  the  extent 
and  the  value  of  the  work. 

RY  iii  * 

265790 


iv  PRINCIPLES  OF  BOOKKEEPING 

The  authors  wish  to  acknowledge  their  indebtedness  to  the  follow- 
ing persons  for  helpful  suggestions  and  criticisms  of  the  manuscript: 
Henry  R.  Hatfield,  Professor  of  Accounting,  University  of  California ; 
Stephen  W.  Oilman,  Professor  of  Business  Administration,  University 
of  Wisconsin;  John  K.  Wildman,  Professor  of  Accounting,  New  York 
University ;  J.  A.  Book,  Head  of  the  Commercial  Department,  South 
Division  High  School,  Milwaukee,  Wisconsin ;  Ivan  E.  Chapman,  Head 
of  the  Commercial  Department,  Northwestern  High  School,  Detroit, 
Michigan;  Elizabeth  Campbell,  Commercial  Department,  High  School, 
Somerville,  Massachusetts ;  Myron  F.  Palmer,  Principal  Bay  Path 
Institute,  Springfield,  Massachusetts. 

Business  men,  bookkeepers,  and  certified  public  accountants  have 
also  been  consulted  freely  regarding  many  features  of  the  text,  and 
their  practical  suggestions  have  added  to  the  working  value  of  the  book. 


CONTENTS 

CHAPTER  PAGE 

I.    FUNDAMENTAL  PRINCIPLES 1 

II.    SET  I.    RETAIL  FUEL  AND  FEED  BUSINESS 59 

III.  INTRODUCTION  OF  THE  CASHHOOK 71 

IV.  SET  II.    WHOLESALE  CARPET  BUSINESS 75 

V.    ADDITIONAL  BOOKS  USED 86 

VI.    INTRODUCTION  TO  BUSINESS  PRACTICE 96 

VII.    SET  III.     GRAIN  AND  SEED  BUSINESS 106 . 

VIII.    INDORSEMENTS  AND  INTEREST 118 

IX.    SET  III.     GRAIN  AND  SEED  BUSINESS  (Continued)  ....  121 

X.    SET  IV.    GENERAL  HARDWARE  BUSINESS 128 

XL    SET  IV.     GENERAL  HARDWARE  BUSINESS  (Continued)      .     .  142 

XII.    GENERAL  KEVIEW 150 

XIII.  COMMERCIAL  DRAFTS 155 

XIV.  THE  DIRECT  METHOD  OF  CLOSING  THE  LEDGER 167 

XV.    GENERAL  REVIEW 172 

XVI.    ADDITIONAL  BUSINESS  FORMS  AND  MISCELLANEOUS  EXERCISES  177 

XVII.    COMMERCIAL  DRAFTS  (Continued) 185 

XVIII.    SET  V.    JOBBING-  FURNITURE  BUSINESS 193 

XIX.    SET  V.    JOBBING  FURNITURE  BUSINESS  (Continued)    ..    .     .  233 

XX.    SET  V.    JOBBING  FURNITURE  BUSINESS  (Continued)    .     .     .  246 

APPENDIXES 

A.  DEFINITIONS  AND  RULES i 

B.  COMMERCIAL  TERMS  DEFINED iii 

C.  ABBREVIATIONS  AND  GENERAL  TERMS vi 

I).    FORMS  AND  LEGAL  DOCUMENTS viii 

E.  THE  USE  OF  TELEGRAMS xiii 

F.  THE  FORMATION  OF  PARTNERSHIP xv 

INDEX .  xvii 


LIST  OF  SETS 

SETS  FOR  RECORDING  IX  THE  BLANK  BOOKS 

PAGE 

SET      I.    RETAIL  FUEL  AND  FEED  BUSINESS 59 

SET    II.    WHOLESALE  CARPET  BUSINESS 75 

SET  III.   GRAIN  AND  SEED  BUSINESS,  MARCH ,     .  106 

SET  III.    GRAIN  AND  SEED  BUSINESS,  APRIL 121 

SET   IV.    GENERAL  HARDWARE  BUSINESS,  MAY 128 

SET  IV.    GENERAL  HARDWARE  BUSINESS,  JUNE 142 

SET     V.    JOBBING  FURNITURE  BUSINESS,  JULY 193 

SET     V.    JOBBING  FURNITURE  BUSINESS,  AUGUST 233 

SET     V.   JOBBING  FURNITURE  BUSINESS,  SEPTEMBER 246 

SUPPLEMENTARY  SETS 

SET  A.    GENERAL  MERCHANDISE 10 

SET  B.    FURNITURE 25 

SET  C.    GRAIN  AND  SEED 26 

SET  D.    TEA  AND  COFFEE 54 

SET  E.    FLOUR  AND  GRAIN 87 

SET  F.    COAL  AND  WOOD .....  94 

SET  G.    GRAIN 151 

SET  H.    GENERAL  MERCHANDISE    .  174 


vi 


LIST  OF   EXERCISES 


PAGE 

EXERCISE  1.  BUSINESS  TRANSACTIONS,  ORAL  WOKK 1 

EXERCISE  2.  BUSINESS  TRANSACTIONS,  OKAL  WORK 2 

EXERCISE  3.  BUSINESS  TRANSACTIONS 3 

EXERCISE  4.  BUSINESS  TRANSACTIONS 3 

EXERCISE  5.  BUSINESS  TRANSACTIONS 5 

EXERCISE  6.  DEBITS  AND  CREDITS,  ORAL  WORK 6 

EXERCISE  7.  PROMISSORY  NOTES,  ORAL  WORK 7 

EXERCISE  8.  BUSINESS  TRANSACTIONS 8 

EXERCISE  9.  JOURNALIZING 15 

EXERCISE  10.  POSTING  THE  MODEL  JOURNAL,  FOR  STUDY 20 

EXERCISE  11.  ANALYSIS  OF  ENTRIES,  ORAL  WORK 21 

EXERCISE  12.  POSTING  23 

EXERCISE  13.  JOURNALIZING 24 

EXERCISE  14.  JOURNALIZING 24 

EXERCISE  15.  JOURNALIZING 24 

EXERCISE  16.  JOURNALIZING  .  . 25 

EXERCISE  17.  NET  PROFITS 29 

EXERCISE  18.  ANALYSIS  OF  ACCOUNTS,  ORAL  WORK 30 

EXERCISE  19.  REVIEW,  ORAL  WORK 33 

EXERCISE  20.  REVIEW 34 

EXERCISE  21.  REVIEW 35 

EXERCISE  22.  CLOSING  THE  MODEL  LEDGER  44 

EXERCISE  23.  LEDGER  CLOSINGS 44 

EXERCISE  24.  CLOSING  THE  LEDGER 45 

EXERCISE  25.  CLOSING  THE  LEDGER 49 

EXERCISE  26.  CLOSING  THE  LEDGER 52 

EXERCISE  27.  BALANCING  THE  CASH  ACCOUNT 54 

EXERCISE  28.  REVIEWS:  JOURNALIZING;  STATEMENTS;  CLOSING  THE  LEDGER  .  64 

EXERCISE  29.  BOOKKEEPING  PROBLEMS 70 

EXERCISE  30.  THE  CASHBOOK  72 

EXERCISE  31.  REVIEWS:  STATEMENTS;  CLOSING  THE  LEDGER;  JOURNALIZING  .  80 

EXERCISE  32.  TRANSACTIONS  WITH  A  BANK 101 

EXERCISE  33.  BUSINESS  FORMS  :  RECEIPTS  ;  INVOICES  ;  PROMISSORY  NOTES  .  .  103 
EXERCISE  34.  REVIEWS  :  JOURNALIZING  ;  CLOSING  THE  LEDGER  ;  STUDY  OF  THE 

BANK  ACCOUNT 115 

EXERCISE  35.  REVIEW:  STATEMENTS 116 

EXERCISE  36.  PROBLEMS 117 

EXERCISE  37.  INTEREST  ENTRIES 120 

EXERCISE  38.  REVIEWS  :  JOURNALIZING  ;  ANALYSES  ;  CLOSING  THE  LEDGER  ; 

WRITING  BUSINESS  FORMS 125 

EXERCISE  39.  REVIEWS:  JOURNALIZING  ;  WRITING  A  SET 138 

vii 


RY 


viii  PRLNCIPLES  OF  BOOKKEEPING 

PAGE 

EXERCISE  40.    REVIEWS:   STATEMENTS  ;   ANALYSES;  JOURNALIZING;  CLOSING  THE 

LEDGER 139 

EXERCISE  41.    REVIEWS:    Joi -RXALI/IX<;  ;    WHITING    BUSINESS  FORMS;    ANALYSES  148 

EXERCISE  42.    REVIEWS:    STATEMENTS;    CLOSING  THE  LEDGER 149 

EXERCISE  43.  GENERAL  REVIEWS,  SI-GGESTKD  STUDIES  FOR  DISCUSSION:  PROFIT 
AND  Loss  STATEMENT;  BALANCE  SHEET  OR  FINANCIAL  STATE- 
MENT    150 

EXERCISE  44.    REVIEWS:    STATEMENTS;    CLOSING  THE  LEDGER    .........  163 

EXERCISE  45.    SIGHT  DRAFTS 157 

EXERCISE  46.    BANK  DRAFTS,  ORAL  WORK 163 

EXERCISE  47.    TIME  DRAFTS 166 

EXERCISE  48.    REVIEW  OF  DEIJITS  AND  CREDITS 172 

EXERCISE  49.    REVIEW  OF  CHECKS  AND  DRAFTS 173 

EXERCISE  50.    MONTHLY  STATEMENTS  OF  ACCOUNTS 178 

EXERCISE  61.   DISCOUNT  OF  NOTES 182 

EXERCISE  62.    PARTIAL  PAYMENTS 183 

EXERCISE  68.   DISCOUNTS 184 

EXERCISE  64.    REVIEW  OF  SIGHT  DRAFTS 185 

EXERCISE  55.   TIME  DRAFTS 190 

EXERCISE  56.    REVIEW  OF  TIME  DRAFTS • 191 

EXERCISE  57.   OPENING  DOUHLE-ENTRY  BOOKS      194 

EXERCISE  58.    REVIBWS  :   JOURNALIZING  STATEMENTS 230 

EXERCISE  59.    REVIEWS:    STATEMENTS;   DISCUSSION;   JOURNALIZING 244 

EXERCISE  60.    REVIEWS:    DISCUSSION;    STATEMENTS;    JOURNALIZING 265 

EXERCISE  61.   PARTNERSHIP  ARRANGEMENTS                                                                    .  256 


RY 


PRINCIPLES  OF  BOOKKEEPING 

CHAPTER  I 

FUNDAMENTAL  PRINCIPLES 

BUSINESS  TRANSACTIONS  EXPLAINED 

g 

Business  Transactions.  A  business  transaction  is  an  exchange  of 
values ;  that  is,  one  value  is  given  in  return  for  another. 

/      Property.    In  some  transactions  some  form  of  property  is  exchanged 
for  money. 

ILLUSTRATION.  A  man  bought  a  table  for  cash,  $:}().  What  was  the  value 
received  ?  the  value  parted  with  ? 

Use,  or  Hire.  In  other  business  transactions  the  value  received  or 
parted  with  is  the  use,  or  the  hire,  of  property  which  belongs  to  another. 

1 1.  LUST  RATION.  You  hired  a  horse  and  carriage  at  a  livery  for  an  afternoon  drive 
for  which  you  paid  cash,  $3.  What  was  the  value  received '!  the  value  parted  with  ? 

Labor,  or  Service.  In  still  another  kind  of  business  transaction  the 
value  received  or  parted  with  is  labor,  or  service. 

ILLUSTRATION.  A  merchant  hired  a  young  man  as  a  clerk  and  at  the  end  of  each 
week  paid  him  cash,  $10.  What  was  the  value  received  ?  the  value  parted  with  ? 

Promises.  In  some  business  transactions  the  value  received  or  parted 
with  is  an  oral  or  an  implied  promise. 

ILLUSTRATION.  A  jeweler  sold  Henry  Bird  a  watch  for  which  he  was  to  receive 
$20,  in  1  mo.  The  value  received  by  the  jeweler  was  the  promise  of  Henry  Bird, 
and  the  value  parted  with  was  the  watch. 

Exercise  1.    Business  Transactions 

For  Oral  Work 

Name  the   value   received   and   the   value  parted   with   in    each   of  the 
following  transactions  : 
Property : 

1.  A  young  man  bought  a  pair  of  skates  for  cash, 

2.  You  bought  a  hat  for  cash,  $2. 


2  PRINCIPLES  OF   BOOKKEEPING 

3.  A  man  bought  an  automobile  for  cash,  $1000. 

4.  A  man  bought  a  piano  for  his  daughter  for  cash,  $400. 

5.  A  sportsman  owned  a  rifle  which  he  sold  for  cash,  $25. 

Use,  or  Hire: 

1.  A  merchant  rented  a  store  for  which  he  paid  cash,  each  month,  $75. 

2.  A  doctor  rented  a  suite  of  rooms  in  a  business  block  for  which 
he  paid  cash,  each  month,  $50. 

3.  You  hired  an  automobile  for  one  hour  for  which  you  paid  cash,  $3. 

4.  A  man  borrowed   $300  from  a  neighbor  and  at  the  end  of  2  mo. 
he  returned  it  and  paid  cash,  $3,  as  interest. 

5.  You  loaned  $50  for  6  mo.  which  was  repaid  to  you  at  the  end  of 
the  time,  with  cash,  $1.50,  as  interest. 

Labor,  or  Service : 

1.  A  man  paid  a  boy  cash,   75^,  for  shoveling  the  snow  from  his 
sidewalk. 

2.  You  gave  a  doctor  cash,  $20,  for  attending  you  during  an  illness. 

3.  A  bookkeeper  received  cash,  $60,  for  his  monthly  salary. 

4.  A  messenger  delivered  some  packages  for  you  for  which  you  paid 
him  cash,  $1. 

5.  You  paid  a  stenographer  cash,  $10,  for  copying  a  manuscript. 

Promises  : 

1.  A  tailor  sold  John  Larson  a  suit  of  clothes  for  $35,  to  be  paid 
for  in  20  da. 

2.  A  grocer  sold  John  Fallen  a  barrel  of  flour  for  $6,  to  be  paid 
for  in  10  da. 

3.  A  dealer  sold  John  Kenyon  a  Morris  chair  for  $15,  to  be  paid 
for  in  20  da. 

4.  You  bought  of  Connor  &  Co.  a  set  of  books  for  $12,  to  be  paid 
for  in  1  mo. 

5.  A  woman  bought  of  Searle  &  Son  a  writing  desk  for  $18,  to  be 
paid  for  in  30  da. 

Exercise  2.   Business  Transactions 
For  Oral  Work 

Name  the  value  received  and  the  value  parted  with  in  each  of  the 
following  representative  transactions  from  the  business  of  a  merchant, 
John  A.  Weeks : 

Feb.  1.  Bought  of  L.  A.  Crane,  for  cash,  2050yd.  cambric  at  5^. 
2.  Sold  E.  C.  Lyman,  for  cash,  550  yd.  cambric  at  7#. 


FUNDAMENTAL  PRINCIPLES  3 

Feb.  3.  Sold  John  Lester,  for  cash,  2(>0  yd.  cambric  at  70. 

4.  Bought  of  H.  A.  Lowney,  for  cash,  1020  yd.  fancy  gingham  at  90. 

5.  Sold  James  Wade,  for  cash,  320yd.  fancy  gingham  at  120.         3 

6.  Sold  James  Snyder,  for  cash,  75  yd.  cambric  at  70.  ^x,  6" 

8.  Bought  of  Henry  A.  Wren,  for  cash,  500  yd.  cambric  at  50.        2 

9.  Sold  Horace  Jensen,  for  cash,  275  yd.  cambric  at  70. 

10.  Bought  of  Henry  Taylor,  for  cash,  250  yd.  fancy  gingham  at  90. 

11.  Sold  Miller  &  Co.,  for  cash,  200yd.  fancy  gingham  at  120. 

12.  Sold  Jones  &  Son,  for  cash,  450  yd.  cambric  at  70. 

13.  Sold  John  S.  Reed,  for  cash,  250  yd.  fancy  gingham  at  120. 

15.  .Sold  Wilson  &  Allen,  for  cash,  300yd.  cambric  at  70. 

16.  Sold  Henry  Winters,  for  cash,  150  yd.  cambric  at  70. 


Merchandise  and  Cash.    The  technical  term  applied  to  goods  bought    \    /3 
to  be  sold  is  merchandise ;  that  applied   to   all   forms    of   money,   and          / 
business  papers   which   pass    as   money,  is   cash.    Cash   includes  gold, 
silver,  paper  money,  checks,  money  orders,  etc. 

Exercise  3.    Business  Transactions 

For  Written  Work 

Take  a  sheet  of  paper  and  draw  a  line  through  the  middle  of  the 
page  from  the  top  to  the  bottom.  On  the  left  side  of  the  line  write 
the  technical  name  of  the  value  received,  and  on  the  right  side  of 
the  line  write  the  technical  name  of  the  value  parted  with,  for  each 
transaction  in  Exercise  2. 

The  transactions  of  Feb.  1  and  2  will  appear  as  follows,  in  the  order  named  : 


Mdse.  Purchases  $102.50 

Cash  38.50 


Cash  $102.50 

Mdse.  Sales  38.50 


Exercise  4.    Business  Transactions 

For  Written  Work 

Work  out  in  the  same  form  as  in  Exercise  3  the  following  representative 
transactions  from  the  business  of  a  merchant,  Richard  S.  Howe  : 
SUGGESTION.    As  a  review  this  exercise  may  be  used  orally. 

March  1.    Bought  of  N.  P.  Weston,  for  cash,  400  bu.  wheat  at  $1. 

2.  Sold  Wm.  Dresser,  for  cash,  100  bu.  wheat  at  $1.25. 

3.  Paid  Henry  A.  Milton  cash,  for  rent  of  the  store  for  1  mo.,  $28. 


4  PRINCIPLES  OF  BOOKKEEPING 

A  receipt  similar  to  the  one  illustrated  in  the  following  script  form  would  be 
received  by  Richard  S.  Rowe  from  Henry  A.  Milton. 

The  value  received  was  the  use  of  the  store,  and  the  name  of  this  value  is 
Rent  Paid. 


A  RECEIPT 


March  4.  Bought  of  Henry  N.  Curtis,  for  cash,  200  bu.  rye  at  $1. 

5.  Bought  of  A.  L.  Waters  50  bu.  clover  seed  at  $6,  and  Mr.  Rowe 
agreed  to  pay  for  it  in  30  da. 

In  this  transaction  the  value  received  is  the  50  bu.  of  clover  seed,  and  the  value 
parted  with  is  the  stated  or  implied  promise  to  pay  for  it  in  30  da. 

6.  Sold  Harry  M.  Wells  80  bu.  wheat  at  |1.25,  and  he  agreed  to 
pay  for  it  in  10  da. 

The  transactions  for  March  5  and  6  will  appear  on  the  written  sheet  as  follows: 


Mdse.  Purchases  $300 

Promise  of  Harry  M.  Wells          100 


Promise  to  A.  L.  Waters  $300 

Mdse.  Sales  100 


8.  Sold  Henry  Dawson,  on  account,  60  bu.  rye  at  $1.30. 

In  this  transaction  on  account  means  that  the  goods  sold  are  to  be  paid  for  at 
some  future  time.    A  promise  was  received. 

9.  Sold  Henry  Cook,  on  account,  120  bu.  wheat  at  $1.25. 

10.  Sold  Henry  C.  Baker,  for  cash,  12  bu.  clover  seed  at  $7.50. 

11.  Received  of  Henry  Dawson  cash,  to  apply  on  account,  $50. 

Henry  Dawson's  promise  given  March  8  is  here  redeemed. 

In  this  transaction  to  apply  on  account  means  that  a  part  of  what  was  owed  on 
a  given  account  was  paid. 

12.  Bought  of  Carey  &  Co.,  on  account,  200  bu.  wheat  at  $1. 

13.  Bought  of  Lee  &  Wise,  for  cash,  100  bu.  rye  at  $1. 

15.  Bought  of  T.  A.  Larson,  for  cash,  3  T.  coal  for  office  use  at  $7. 
The  name  of  the  value  received  is  Fuel. 

16.  Sold  Henry  D.  Wilson,  for  cash,  150  bu.  rye  at  $1.30. 


FUNDAMENTAL  PRINCIPLES  5 

March  17.  Sold  John  S.  Wise,  on  account,  18  bu.  clover  seed  at  $7.50. 

18.  Received  of  Henry  Cook  cash,  to  apply  on  account,  $100. 

19.  Received  of  Henry  Dawson  cash,  in  full  of  account,  $28. 

In  full  of  account  means  that  all  that  was  owed  on  a  given  account  was  paid. 

20.  Paid  Carey  &  Co.  cash,  to  apply  on  account,  $125. 

^     Exercise  5.    Business  Transactions 
For  Written  Work 

Work  out  in  the  same  form  as  in  Exercise  3  the  following  representative 
transactions  from  the  business  of  a  merchant,  John  R.  Howe: 
SUGGESTION.    As  a  review  this  exercise  may  be  used  orally. 

April  1.  Bought  of  John  E.  Smith,  for  cash,  200  yd.  Brussels  carpet 
at  $1.50. 

2.  Bought  of   Thomas  A.  Elton,  for  cash,  150  yd.  ingrain   carpet 
at  80#. 

3.  Sold  James  Warren,  on  account,  50  yd.  Brussels  carpet  at  $2. 

4.  Sold  Hale  &  Co.,  for  cash,  60  yd.  ingrain  carpet  at  $1. 

5.  Bought  of  Ernest  M.  Little,  on  account,  100  yd.  velvet  carpet 
at  $1.40. 

6.  Paid  Seth  E.  Drake  cash,  for  rent  of  the  store  for  April,  $30. 
8.  Received  of  James  Warren  cash,  to  apply  on  account,  $50. 

0.  Sold  Helen  S.  Meek,  for  cash,  20yd.  velvet  carpet  at  $1.75. 

10.  Paid  Ernest  M.  Little  cash,  to  apply  on  account,  $75. 

11.  Sold  Henry  C.  Dane,  on  account,  40  yd.  Brussels  carpet  at  $2. 

12.  Sold  Hale  &  Co.,  on  account,  30  yd.  ingrain  carpet  at  $1. 

13.  Received  of  James  Warren  cash,  in  full  of  account,  $50. 

15.  Bought  of  James  Hardin,  for  cash,  4  T.  coal  for  office  use  at  $7.50. 

16.  Sold  James  Warren,  on  account,  50  yd.  Brussels  carpet  at  $2. 

17.  Sold  Mary  S.  Packard,  for  cash,  25  yd.  velvet  carpet  at  $1.80. 

18.  Paid  John  E.  Brown,  a  clerk,  cash,  $15. 

The  value  received  wras  the  service  of  the  clerk,  and  the  name  of  this  value  is 
Salary. 

Debits  and  Credits.  In  the  preceding  exercises  all  items  at  the  left 
of  the  perpendicular  line  are  debits,  and  all  items  at  the  right  are 
credits ;  hence  debits  represent  values  received,  and  credits  represent 
values  parted  with. 

We  come  into  possession  of  things  because  we  are  able  to  give  some- 
thing in  return  for  the  things  we  receive  and  own,  and  bookkeeping 


6  PRINCIPLES  OF  BOOKKEEPING 

necessitates  the  keeping  of  a  record  of  all  that  is  received  and  of  all 
that  is  parted  with.  In  business  whatever  we  own  costs  us  something, 
and  this  appears  as  a  debit  record ,  whatever  we  part  with  produces 
something,  and  this  appears  as  a  credit  record. 

ILLUSTRATION.  A  man  paid  $5  for  a  hat ;  the  ownership  of  the  hat  cost  him 
the  $5,  and  the  parting  with  the  $5  made  him  the  owner  of  the  hat. 

Journalizing.  A  systematic  classification  of  debits  and  credits  in 
business  transactions  is  called  journalizing. 

By  custom,  the  left-hand  side  is  the  debit  side,  and  the  right-hand  side 
the  credit  side. 

Exercise  6.    Debits  and  Credits 

For  Oral  Work 

As  an  oral  exercise,  go  over  all  the  transactions  in  Exercises  4  and  o 
and  classify  the  values  received  and  parted  with  as  debits  and  credits. 


Promissory  Notes.  In  the  preceding  exercises  it  has  been  shown  that 
men  often  buy  and  sell  goods  by  giving  or  receiving  an  oral  or  an 
implied  promise  to  pay.  This  is  indicated  by  writing  in  the  record  the 
name  of  the  person  by  whom  or  from  whom  the  promise  was  given  or 
received ,  this  name  indicates  the  value  given  or  received. 

When  the  promise  is  made  in  writing,  it  is  called  a  promissory  note. 


f  / '2-0 '  Q-^^~                                               ~fefor4^rt-yiS>S??a^L<1.    Qa^s.  /{,,  19  — 
' " —    t^^^LT^y  s^^tz^if^sL/  • '  after  dale^L-pTomix  to  pay  to 

the  order  nf  vr//f>-^-^tZs^2^>7^/;  ts/^x/^-/^/?-^^  fr^Y^xT?-^  ^- 

xi  /r  .  x  ^-^' 

: 'Dollars 


at 


"Oalue  received 

ftfr   /  2-         'Due  <=£*^-/JJ  /#—  "^V^ 


A    PROMISSORY   NOTE 

In  this  note   Henry  W.  Sherman  promises  to  pay   Morgan,  Taylor  &  Co.   the  sum 
of  $1200.65.    This  note  was  made  on  Jan.  16,  19—,  and  payment  will  be  made  30  da. 

after  that  date 

Your  written  promise  to  pay  another  person  a  sum  of  money  is 
called  notes  payable;  the  written  promise  of  another  to  pay  you  is 
called  notes  receivable. 


FUNDAMENTAL  PKIXCIPLES  7 

The  promissory  note  in  the  illustration  would  he  classified  as  notes  payable  by 
Henry  W.  Sherman,  and  as  notes  receivable  by  •Morgan,  Taylor  &  Co. 

When  a  note  made  by  another  person  comes  into  your  possession, 
the  name  of  the  value  received  is  notes  receivable ;  when  you  give 
your  note  to  another  person,  the  name  of  the  value  given  by  you  is 
notes  payable. 

The  following  transactions  and  the  records  for  each  should  be  studied 
carefully : 

Receive  of  A.  T.  Parker  his  note  at  10  da.,  on  account ;  record  as  follows  : 
Notes  Receivable  A.  T.  Tarker 

Give  your  note  at  30  da.  to  James  L.  Monroe,  on  account;  record  as  follows: 
James  L.  Monroe  Xotes  Payable 

When  you  receive  payment  from  A.  T.  Parker,  make  this  record  : 
Cash  Xotes  Receivable 

When  you  pay  your  note  in  favor  of  James  L.  Monroe,  make  this  record : 
Notes  Payable  Cash 

When  the  settlement  is  made  for  a  note,  the  money  is  received  from 
or  given  to 'a  person  or  a  firm.  In  the  following  exercise,  do  not  use 
the  name  of  the  person  or  the  firm  in  making  the  record. 

When  money  is  received  for  a  note  in  full,  the  record  shows  Cash  as 
the  value  received,  and  Notes  Receivable  as  the  value  parted  with,  and 
the  note  is  returned  to  the  person  who  signed  it,  marked  Paid.  The 
business  has  received  cash  and  parted  with  a  note. 

When  one  pays  a  note,  the  value  parted  with  is  C'ash,  and  the  value 
received  is  Notes  Payable ;  the  note  is  then  returned,  marked  Paid. 

Exercise  7.    Promissory  Notes 

For  Oral  Work 
Name  the  debit  and  the  credit  in  each  of  the  following  transactions  : 

1.  Give  W.  B.  Mercer  your  note  at  10  da.,  to  apply  on  account,  $200. 

2.  Receive  of  A.  B.  Slater  his  note  at  30  da.,  to  apply  on  account,  $300. 

3.  Give  Lowe  &  Co.  your  note  at  15  da.,  to  apply  on  account,  $400. 

4.  Receive  of  H.  M.  Lawton  his  note  at  10  da.,  to  apply  on  account, 
$500. 

5.  Receive  of  A.  B.  Slater  cash,  for  his  note,  $300. 

6.  Pay  Lowe  &  Co.  cash,  for  your  note,  $400. 


8  PRINCIPLES  OF  BOOKKEEPING 

7.  Give  A.  L.  Bronson  your  note  at  20  da.,  in  full  of  account,  $150. 

8.  Pay  W.  B.  Mercer  cash,  for  your  note,  $200. 

9.  Receive  of  David  I.  Ware  his  note  at  15  da.,  to  apply  on  account, 
$250. 

10.  Pay  A.  L.  Bronson  cash,  for  your  note,  $150. 

11.  Receive  of  David  I.  Ware  cash,  for  his  note,  $250. 

"^    Exercise  8.   Business  Transactions 

For  Written  Work 

Classify  as  debits  and  credits  the  following  representative  transactions 
from  the  business  of  a  merchant,  Datdel  lr.  Case  : 

June  1.  Bought  of  John  L.  Quaker,  for  cash,  100  bbl.  apples  at  $3. 

2.  Bought  of  E.  E.  Weller,  on  account,  175bu.  potatoes  at  80<£. 

3.  Sold  L.  A.  Kane,  at  5  da.,  25  bbl.  apples  at  $4. 
At  5  da.  means  on  account,  to  be  settled  within  5  da. 

4.  Sold  Johnson  &  Co.,  at  10  da.,  40  bu.  potatoes  at  $1. 

5.  Gave  E.  E.  Weller  a  note  at  5  da.  for  $100,  to  apply  on  account. 

6.  Sold  E.  E.  Wiser,  for  cash,  20  bbl.  apples  at  $4. 

8.  Received  of  L.  A.  Kane  his  note  at  10  da.  for  $80,  to  apply 
on  account. 

9.  Sold  James  D.  Kerns,  on  account,  80  bu.  potatoes  at  $1. 

10.  Paid  E.  E.  Weller  cash,  for  a  note  due  to-day,  $100. 

11.  Received  of  James  D.  Kerns  his  note  at  30  da.  for  $50,  to  apply 
on  account. 

12.  Received  of  Johnson  &  Co.  their  note  at  20  da.  for  the  amount 
of  the  invoice  of  June  4. 

13.  Received  of  L.  A.  Kane  cash,  in  full  of  account. 
Refer  to  June  3  and  8. 

IS.  Sold  Hill  &  Co.,  on  account,  10  bbl.  apples  at  $4. 

18.  Received  of  L.  A.  Kane. cash,  for  his  note  due  to-day,  $80. 

SUGGESTIONS  FOR  RULING 

Good  mechanical  work  is  essential  in  bookkeeping.  If  good  results 
are  to  be  secured,  the  pen,  the  ruler,  and  the  blotter  must  be  used  in 
the  right  way. 

When  red  ink  is  procurable,  use  it  in  ruling ;  always  have  a  blotter 
at  hand ;  use  a  medium  pen,  not  too  fine ;  dip  the  pen  in  the  ink 
lightly;  avoid  getting  ink  on  the  ruler. 


FUNDAMENTAL  PRINCIPLES  9 

Use  ordinary  writing  paper,  ruled ;  sit  facing  the  desk  squarely ; 
place  the  paper  directly  in  front  of  you. 

Place  the  beveled  edge  of  the  ruler  just  below  the  first  ruled  line 
on  the  page ;  keeping  the  pen  on  the  ruled  line  with  the  point  away 
from  the  ruler,  draw  a  line  across  the  page  as  follows : 

Do  not  lift  the  pen  until  the  line  is  finished.  Continue  this  ruling 
until  you  have  ruled  a  red  line  on  every  blue  line  of  the  page. 

Now  rule  lines  between  the  ruled  lines  of  the  page  just  finished. 

Use  a  second  sheet  of  paper  for  ruling  double  lines.  Draw  a  single  red 
line  on  the  blue  line ;  without  moving  the  ruler  draw  a  second  red  line 
just  underneath  the  first.  You  now  have  parallel  lines  across  the  page. 

Parallel  lines :  . 

In  ruling  parallel  lines  the  position  of  the  ruler  is  not  changed,  but 
the  hand  is  pressed  slightly  forward. 

Repeat  the  parallel  ruling  until  both  sides  of  the  sheet  have  been 
ruled,  then  rule  parallel  lines  between  the  lines  already  ruled. 

This  work  in  ruling  should  be  repeated  from  day  to  day  until  good  results 
are  secured. 

THE  SCRIPT  FORMS  AND  MODELS 

In  connection  with  the  student's  preliminary  work  he  is  directed  to 
write  some  of  the  script  forms  given  on  later  pages.  These  forms 
represent  the  highest  excellence  in  penmanship  and  may  serve  as  models 
in  writing  for  the  student.  The  plan,  statement,  and  arrangement  of 
these  models  may  be  a  guide  to  the  student  in  all  his  work  throughout 
the  book.  The  method  of  placing  matter  on  the  page  and  the  complete- 
ness of  explanations  are  parts  of  high-grade  bookkeeping. 

While  writing  these  models  the  student  is  learning  how  to  place  busi- 
ness transactions  on  the  written  page  in  the  most  approved  manner.  Busi- 
ness records  are  not  only  valuable  when  made,  but  may  be  of  especial 
importance  years  hence ;  therefore  it  is  necessary  that  the  statements  be 
clear  not  only  to  the  writer  but  to  any  person  who  may  have  occasion 
to  examine  them  at  any  future  time.  If  books  are  introduced  into  court 
as  evidence,  the  explanatory  part  of  the  records  is  often  the  most  impor- 
tant. It  is  the  experience  of  attorneys  that  very  few  books  of  record 
that  are  brought  into  court  have  any  value  as  evidence,  because  of  the 
incompleteness  of  the  explanatory  matter.  If  explanations  are  not  made 
clearly,  a  correct  entry  is  of  little  value  as  conclusive  evidence. 

Erasures  are  not  to  be  tolerated,  as  they  not  only  spoil  the  neatness 
of  the  page  but  often  make  entries  look  suspicious. 


10  PRINCIPLES  OF  BOOKKEEPING 

In  the  work  of  the  modern  bookkeeper  the  accuracy  of  the  facts 
stated  as  well  as  the  form  in  which  these  facts  are  set  forth  are  of 
increasing  importance.  The  purpose  which  the  statements  are  to  serve 
should  always  be  kept  in  mind,  and  the  facts  should  be  so  arranged 
as  to  give  the  reader  the  maximum  amount  of  information  with  a  mini- 
mum amount  of  effort  upon  his  part.  Courts  of  law  not  infrequently 
reject  reports  submitted  to  them  because  of  the  lack  in  clearness  of 
statement.  Various  departments  of  municipal,  state,  and  federal  govern- 
ments often  require  that  certain  reports  and  statements  follow  prescribed 
forms,  and  no  others  will  be  accepted. 

From  these  facts  the  student  should  realize  the  importance  of  both 
accuracy  and  proper  form  in  preparing  reports  and  statements.  The 
script  and  other  forms  in  this  text  present  to  the  student  a  special 
opportunity  for  learning  the  standard  forms  of  statements  generally 
used  in  modern  business. 

SET  A.    GENERAL  MERCHANDISE 
MODEL  SET 

Introductory  Study.  On  pages  12,  13,  16,  17,  22,  32,  40,  and  41  is 
a  model  set,  in  script,  complete  in  every  detail.  This  set  was  written 
from  the  Memoranda  of  Transactions  on  page  11. 

The  following  principles  apply  to  entries  in  the  model  journal: 

A  person  who  owes  a  debt  is  called  a  debtor;  a  person  to  whom  a 
debt  is  owed,  a  creditor. 

A  debit  is  an  amount  due  the  business,  or  the  amount  of  a  thing 
or  a  service  received  ;  a  credit  is  an  amount  owed  by  the  business,  or 
the  amount  of  a  thing  or  a  service  given. 

In  the  preceding  exercises  the  transactions  have  been  those  of  an  individual,  but 
in  the  sets  transactions  are  considered  in  relation  to  a  business. 

The  money  or  property  with  which  a  man  begins  business,  or  which 
he  puts  into  the  business,  is  termed  an  investment. 

In  these  practice  sets  cash  investments  will  be  used. 

In  Set  A  the  proprietor,  David  Lane,  makes  a  cash  investment  of  $1800. 

The  paragraph  in  script  at  the  beginning  of  the  journal  is  the  memo- 
randum, setting  forth  the  conditions  under  which  the  business  was  begun. 

Journalizing.  Study  each  transaction  of  the  following  memoranda  in 
connection  with  the  entry  for  it  in  the  model  journal.  Note  both  the 
debit  and  the  credit,  also  the  explanatory  portion,  and  the  name  given 
to  each  column  in  the  model  journal. 


X? 

FUNDAMENTAL   PRINCIPLES 


MEMORANDA   OF   TRANSACTIONS1 

Jan.  1.    David  Lane  began  business,  investing  cash,  Si  800. 

2.  Paid  A.  L.  Benson  cash,  for  rent  of  the  store  for  January,  $40. 

3.  Bought  of  C.  B.  Mason  for  cash  : 

150  bl)l.  Flour  at  $5.20 

4.  Sold  John  C.  Eno  for  cash  : 

40  bbl.  Flour  at  $6,50 

5.  Bought  of  H.  M.  Field  on  account  : 

400  bu.  Corn  at  60  </; 

6.  Sold  R.  N.  Downs  on  account: 

10  bbl.  Flour  at  $6.50  100  bu.  Corn  at  750 

8.  Gave  H.  M.  Field  a  note  at  5  da.,  to  apply  on  account,  $150. 

9.  Received  of  R.  N.  Downs  his  note  at  15  da.,  to  apply  on  account, 


10.  Sold  L.  Marsh  for  cash: 

20  bbl.  Flour  at  $6.50  120  bu.  Corn  at  75  <4 

11.  Bought  of  Ira  M.  Banks  on  account : 

25  bbl.  Flour  at  §5.20 

13.  Paid  H.  M.  Field  cash,  for  a  note  due  to-day,  $150. 
15.  The  Proprietor  takes  from  the  business  $50  in  cash,  to  apply  on 
liis  monthly  salary. 

Inventory,  January  31,  19 — 
Merchandise : 

105  bbl.  Flour  at  $5.20  $546 

180  bu.  Corn  at  600  108 

NOTE.  The  Inventory  is  placed  immediately  after  the  Memoranda  of  Transactions, 
just  for  convenience.  The  use  of  the  inventory  is  discussed  on  page  28. 

The  fundamentals  of  bookkeeping  are  recognized  by  all  bookkeepers,  but  the 
forms  of  record  vary.  One  of  the  simplest  forms  of  recording  business  transactions 
is  to  write  -the  dates,  the  debit  and  the  credit  titles,  a  complete  history  of  the  trans- 
actions, and  the  money  values  of  the  same  in  a  book  called  the  journal,  including 
the  explanations,  and  to  collect  and  classify  these  entries  in  a  book  of  accounts 
called  the  ledf/er. 

This  method  is  set  forth  in  the  introductory  work. 

1  These  transactions  are  journalized  in  script  on  pages  12  and  13. 


12 


PRINCIPLES  OF  BOOKKEEPING 


/,  /  f — . 

its,  Greditf,and   Explanations  S)ebit  ^Amounts   Greditjlmounh 


MODEL  JOURNAL 

1  The  word  folio  is  abbreviated  as  F,,  and  means  page. 


FUNDAMENTAL  PRINCIPLES 


13 


£>ate 


^Debits,  Gredits,  and  Gxplanations 


it  ^Amounts  Greditdmounts 


/JO     — 


MODEL  JOURNAL  (CONTINUED) 


Analysis  of  the  Model  Journal.  The  follmving  is  an  analysis  of  each 
entry  in  the  model  journal.  Similar  analyses  should  be  used  frequently 
in  connection  with  journalizing,  in  order  to  familiarize  the  student  with 
the  principles  which  govern  his  work  in  bookkeeping. 

Entry  1.    Cash  is  debited  because  value  was  received  by  the  business  under 

the  title  Cash. 
David  Lane  is  credited  because  he  invested  vahie  in  the  business. 

Entry  2.    Rent  Paid  is  debited  because  value  was  received  by  the  business  in 

the  use  of  the  store. 

Cash  is  credited  because  .  value  was  parted  with  by  the  business 
under  the  title  Cash. 

Entry  3.    Merchandise  Purchases  is  debited  because  value  was  received  by 

the  business  under  the  title  given. 

Cash  is  credited  because  value  was  parted  with  by  the  business 
under  the  title  Cash. 

Entry  4.    Cash  is  debited  because  value  was  received  by  the  business  under 

the  title  Cash. 

Merchandise  Sales  is  credited  because  value  was  parted  with  by  the 
business  under  the  title  given. 

Entry  5.    Merchandise  Purchases  is  debited  because  value  was  received  by 

the  business  under  the  title  given. 

H.  M.  Field  is  credited  because  he  parted  with  value ;  the  business 
became  indebted  to  him  :  an  oral  promise  was  given  for  the 
merchandise  bought. 


14 


PRINCIPLES  OF  BOOKKEEPING 


Entry    6.    R.  N.  Downs  is  debited  because  lie  received  value ;  he  became 
indebted  to  the  business  :  an  oral  promise  was  received  for  the 
merchandise  sold. 
Merchandise  Sales  is  credited  because  value  was  parted  with  by 

the  business  under  the  title  given. 

Entry    7.    H.  M.  Field  is  debited  because  he  received  value  from  the  business  : 

a  written  promise  is  received  by  him  to  replace  the  oral  promise. 

Notes  Payable  is  credited  because  value  was  given :  the  business 

issued  a  written  promise  to  pay  a  certain  sum  of  money. 
Entry    8.    Notes  Receivable  is  debited  because  the  business  received  value :  a 
.  written  promise  for  the  payment  of  a  certain  sum  of  money. 
R.  N.  Downs  is  credited  because  he  has  parted  with  value  to  the 
business  :  he  gave  his  written  promise  to  replace  his  oral  promise. 
Entry    9.    Cash  is  debited  because  value  was  received  by  the  business  under 

the.  title  Cash. 
Merchandise  Sales  is  credited  because  value  was  parted  with  by 

the  business  under  the  title  given. 
Entry  10.    Merchandise  Purchases  is  debited  because  value  was  received  by 

the  business  under  the  title  given. 

Ira  M.  Banks  is  credited  because  he  parted  with  value ;  the  busi- 
ness became  indebted  to  him  :  an  oral  promise  was  given  for  the 
merchandise  bought. 
Entry  11.    Notes  Payable  is  debited  because  the  business  gave  value  to 

redeem  its  written  promise. 
Cash  is  credited  because  value  was  parted  with  by  the  business 

under  the  title  Cash. 
Entry  12.    Salary  is  debited  because  value  was  received  by  the  business  in 

the  form  of  service. 

Cash  is  credited  because  value  was  parted  with  by  the  business 
under  the  title  Cash. 

Summary  of  Principles.     In  the  study  of  the  preceding  analysis  it 
has  been  seen  that  we  debit  and  credit  as  follows : 


DEBIT 

1.  Merchandise  and  other  prop- 
erty which  is  bought 
3.  That  which  costs  value 
5.  All  moneys  received 
•7.  Persons    when    they    become 

indebted  to  the  business 
9.  Persons  when  the  business  gets 

out  of  their  debt 
11.  Other  persons'  notes  received 

by  the  business 

13.  Notes  redeemed  or  paid  by  the 
business 


CREDIT 

2.  Merchandise  and  other  prop- 
erty which  is  sold 
4.  That  which  produces  value 
6.  All  moneys  paid  out 
8.  Persons  when  the  business  be- 
comes indebted  to  them 
10.  Persons  when  they  get  out  of 

debt  to  the  business 
12.  Notes  given  or  issued  by  the 

business 

14.  Other  persons'  notes  when  paid 
by  them  to  the  business 


FUNDAMENTAL  PRINCIPLES  15 

The  foregoing  principles  may  be  summarized  as  a  general  principle 
for  journalizing,  as  follows  : 

Debit,  under  appropriate  names,  values  that  are  received  by  the  business. 

Credit,  under  appropriate  names,  values  that  are  given  by  the  business. 

Omission  of  Cents.  In  the  money  columns  at  the  right,  when  writing 
an  even  number  of  dollars,  put  a  dash  in  the  cents  column.  This 
shows  that  an  omission  has  not  occurred,  and  prevents  the  use  of  un- 
authorized figures.  Another  practice  is  to  place  two  ciphers  in  the  cents 
column  rather  than  the  dash. 

Exercise  9.   Journalizing 

For  Written  Work 

Write  the  journal  entries  for  Set  A  on  a  half  sheet  of  journal  paper. 
If  journal  paper  is  not  available,  rule  a  sheet  of  ordinary  writing  paper 
for  a  journal. 

If  necessary,  refer  to  the  script  form  on  pages  12  and  13. 
In  writing  this  journal,  omit  the  figures  in  the  page  column. 

Keep  this  work  for  a  subsequent  exercise. 


Posting.  An  account  is  a  collection  of  related  debits  and  credits  under 
one  heading. 

An  account  may  contain  but  one  debit  or  one  credit. 

The  ledger  is  a  book  which  contains  the  accounts  of  the  business. 
Posting  is  the  process  of  transferring  debit  and  credit  items  to  their 
respective  accounts  in  the  ledger. 

At  present  all  posting  is  from  the  journal. 

Each  different  name  that  appears  in  the  model  journal  requires  an 
account  or  a  heading  of  the  same  name  in  the  ledger :  therefore  there 
are  twelve  accounts  in  the  model  ledger. 

To  open  an  account,  write  in  the  ledger,  as  a  heading,  the  name  to 
which  items  are  to  be  posted. 

Note  that  in  the  model  journal  the  debits  and  the  credits  of  cash  are  distributed 
over  the  entire  page.  Then  note  that  in  the  model  ledger  the  debits  and  the  credits 
of  cash  appear  under  the  heading  of  Cash  on  one  section  of  the  page.  Posting 
brings  about  this  classification  of  debits  and  credits  under  appropriate  headings. 

The  model  ledger  on  pages  16  and  17  shows  the  accounts  posted  from 
the  model  journal. 

The  left  and  the  right  side  of  the  ledger  have  the  same  rulings ;  the 
left  is  the  debit  side,  and  the  right  is  the  credit  side. 


16 


PRINCIPLES  OF  BOOKKEEPING 


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Gxplanation        &".         $ 


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2-2-0 


o.    £)a.        Gxplanahon 


/  0  0 


MODE!,    LEDGER 


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FUNDAMENTAL  PRIXCI PLES 


17 


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MODEL    LKDGKK 


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18  PRINCIPLES  OF  BOOKKEEPING 

Analysis  of  the  Model  Ledger.  The  posting  of  the  model  journal 
has  been  completed.  The  following  is  a  full  explanation  of  each 
account  in  the  model  ledger. 

Each  account  in  which  there  is  more  than  one  amount,  either  in  the  debit  or  in 
the  credit  column,  should  be  footed  ;  minute  figures  should  be  used  to  show  these 
footings,  and  they  should  always  be  written  in  pencil.  These  pencil  footings  should 
be  left  in  the  account. 

Cash  Account : 

The  debit  shows  that  the  business  received  $2280. 
The  credit  shows  that  the  business  paid  out  §1020. 

This  account  is  debited  for  all  cash  received,  and  credited  for  all  cash 
paid  out. 

The  purpose  of  this  account  is  to  record  and  show  the  receipts  and  the 
payments  in  cash,  and  the  amount  of  cash  on  hand  at  a  certain  time. 

The  balance,  that  is,  the  debit  (or  total  amount  of  cash  received)  minus 
the  credit  (or  total  amount  of  cash  paid  out),  should  be  the  balance  on  hand. 
Money  kept  in  a  bank  as  a  deposit  is  counted  as  cash  on  hand. 

Notes  Receivable  Account : 

The  debit  shows  that  the  business  received  notes  made  by  others  to  the 
amount  of  $100. 

The  absence  of  any  credit  amount  shows  that  none  of  these  notes  receiv- 
able has  been  paid. 

This  account  is  debited  for  all  notes  receivable  received  by  the  business 
and  is  credited  for  all  notes  receivable  that  are  paid. 

If  this  account  does  not  balance,  the  debit  is  the  larger  because  the  pay- 
ments cannot  amount  to  more  than  the  notes  receivable  which  have  been 
received  by  the  business. 

Any  balance  in  this  account  shows  the  amount  due  the  business  on  notes 
receivable. 

R.  N.  Downs's  Account : 

The  debit  shows  that  he  has  received  values  from  the  business  to  the 
amount  of  f!40. 

The  credit  shows  that  he  has  paid  the  business  $100  to  apply  on  his 
account. 

This  is  a  personal  account. 

Personal  accounts  are  accounts  with  individuals,  firms,  or  corporations. 
The  debits  of  these  accounts  show  the  values  received  from  the  business ; 
the  credits  show  the  values  parted  with  to  the  business. 

All  personal  accounts  in  a  ledger  in  which  the  debit  side  is  the  larger 
show  that  the  individual,  the  firm,  or  the  corporation  owes  the  business  a 
certain  amount. 

How  much  does  R.  N.  Downs  owe  the  business  ? 


FUNDAMENTAL  PRINCIPLES  19 

Merchandise  Inventory  Account : 

At  the  close  of  the  month  this  account  will  record,  in  this  set,  the  value 
of  the  unsold  merchandise  as  a  debit  amount. 

Notes  Payable  Account : 

The  credit  shows  that  the  business  issued  notes  payable  to  others  to  the 
amount  of  $150. 

The  debit  shows  that  the  notes  issued  were  redeemed,  or  paid  in  full,  by 
the  business. 

This  account  is  credited  for  all  notes  payable  issued  by  the  business. 

It  is  debited  for  all  notes  payable  that  are  redeemed,  or  paid,  by  the  business. 

If  this  account  does  not  balance,  the  credit  side  is  the  larger  because  the 
amount  of  notes  redeemed,  or  paid,  cannot  be  greater  than  the  amount  of 
such  notes  issued. 

Any  balance  in  this  account  shows  the  amount  owed  by  the  business  on 
notes  payable. 

H.  M.  Field's  Account : 

The  credit  shows  that  he  has  disposed  of  values  to  the  business  to  the 
amount  of  $240. 

The  debit  shows  that  the  business  has  paid  him  $150  to  apply  on  its 
account  with  him. 

All  personal  accounts  in  a  ledger  in  which  the  credit  side  is  the  larger 
show  that  the  business  owes  the  individual,  the  firm,  or  the  corporation  a 
certain  amount. 

How  much  does  the  business  owe  H.  M.  Field  ? 

Ira  M.  Banks 's  Account : 

The  credit  shows  that  he  has  disposed  of  values  to  the  business  to  the 
amount  of  $130. 

The  absence  of  any  debit  amount  shows  that  the  business  has  not  paid 
him  anything  to  apply  on  its  account  with  him. 

David  Lane's  Account : 

This  is  the  Proprietor's  account.  The  credit  shows  that  he  invested 
$1800  in  the  business. 

This  account  sets  forth  the  money  value  of  the  Proprietor's  interest  in 
the  business.  This  value  is  called  the  projtrietary  interest.  Other  items 
which  may  appear  in  this  account  will  be  considered  later. 

Merchandise  Sales  Account : 

The  credit  shows  that  the  business  has  sold  merchandise  to  the  amount  of 
$620.  Other  items  which  may  appear  in  this  account  will  be  considered  later. 

Merchandise  includes  all  goods  that  are  bought  to  be  sold.  This  account 
records  the  money  value  of  the  goods  sold. 


20  PRINCIPLES  OF  BOOKKEEPING 

Merchandise  Purchases  Account : 

The  debit  shows  that  the  business  bought  merchandise  to  the  amount  of 
$1150.  Other  items  which  may  appear  in  this  account  will  be  considered  later. 

This  account  records  the  money  value  of  all  goods  bought. 

Rent  Paid  Account : 

The  debit  shows  that  the  business  received  value  (the  use  of  the  store), 
which  cost  $40. 

The  debit  side  only  of  this  account  is  used,  except  for  making  some  credit 
correction,  or  in  closing. 

This  account  represents  an  expense  item ;  that  is,  a  cost  of  carrying  on 
the  business. 

Salary  Account : 

The  debit  shows  that  the  business  received  value  (personal  service),  which 
cost  $50. 

This  also  is  an  account  in  which  only  the  debit  side  is  used,  except  for 
making  a  credit  correction,  or  in  closing. 
It  represents  another  expense  item. 

Similar  analyses  of  ledger  accounts  should  be  used  frequently. 

The  ledger  is  the  book  of  accounts  in  the  business  and  is  referred  to 
frequently  for  information  that  is  wanted  immediately ;  hence  one  should 
be  able  to  understand  and  interpret  an  ordinary  account  at  a  glance.  For 
this  reason  strong  emphasis  has  been  placed  on  the  analysis  of  ledger 
accounts  in  the  very  earliest  stages  of  the  student's  work  in  bookkeeping. 

Exercise  10.   Posting  the  Model  Journal 
For  Study 

Examine  the  posting  from  the  model  journal  to  the  model  ledger,  in 
the  text.  The  model  journal  is  on  pages  12  and  13,  and  the  model 
ledger  on  pages  16  and  17. 

By  referring  to  these  script  pages  the  student  has  the  opportunity  to  study  post- 
ing in  just  the  form  in  which  it  will  appear  in  his  own  work. 

In  the  model  journal  in  each  entry  the  name  that  is  debited  appears  first,  and 
the  name  that  is  credited  appears  second.  The  first  money  column  records  the 
amount  of  the  debit,  and  the  second  money  column  records  the  amount  of  the  credit. 
All  items  in  the  first  money  column  will  be  posted  to  the  left  (debit)  side  of  the 
ledger ;  all  items  in  the  second  money  column  will  be  posted  to  the  right  (credit) 
side  of  the  ledger. 

Trace  the  posting  of  each  debit  item  in  the  model  journal  to  the 
model  ledger. 


FUNDAMENTAL  PRINCIPLES  21 

The  first  item  in  the  model  journal  is  Cash.  Turn  to  the  C fifth  account  in  the 
ledger,  debit  side,  and  note  the  amount,  the  i>a<j<:  of  the  journal  from  which  the 
item  was  posted,  and  the  date.  Above  the  date  the  year  is  written.  The  page  of 
the  ledger  is  written  at  the  left  of  Cash  in  the  journal,  in  the  column  at  the  head 
of  which  is  F.,  which  means  folio  or  paye.  The  writing  of  these  page  numbers  in 
both  the  ledger  and  the  journal  checks  the  posting;  that  is,  it  shows  that  the  posting 
has  been  completed. 

Failure  to  record  the  paging  in  posting  leads  to  errors  in  bookkeeping,  to  a 
waste  of  time  in  locating  the  errors,  and  does  not  allow  ready  reference  to  be 
made  from  one  book  to  the  other. 

The  next  debit  item  is  Rent  Paid.  Turn  to  the  Rent  Paid  account  in  the  ledger 
and  trace  the  amount,  the  page,  and  the  date.  Note  that  the  ledger  page  is  written 
at  the  left  of  Rent  Paid  in  the  journal. 

Trace  the  posting  of  each  credit  item  in  the  model  journal  to  the 
model  ledger. 

The  first  credit  item  in  the  journal  is  David  Lane.  Turn  to  his  account  in  the 
ledger,  credit  side,  and  note  the  amount,  the  page,  and  the  date.  Above  the  date 
the  year  is  written.  The  page  of  the  ledger  is  written  at  the  left  of  David  Lane's 
name  in  the  journal. 

The  next  credit  item  is  Cash.  Turn  to  the  Cash  account  in  the  ledger,  credit 
side,  and  note  the  amount,  the  page,  and  the  date.  Remember  to  write  the  page  of 
the  ledger  at  the  left  of  Cash  in  the  journal. 

Exercise  11.   Analysis  of  Entries 
For  Oral  Work 

Crive  the  correct  analysis  of  the  following,  stating  the  debit  and  the  credit 
in  each  transaction : 

1.  Louis  D.  Warner  invested  cash,  $1000. 

2.  Bought  of  Jerome  L.  Bain,  for  cash,  20  bbl.  apples  for  $55. 

3.  Paid  F.  A.  Rice  cash,  for  rent  of  the  store  for  1  mo.,  $30. 

4.  Received  of  Jones  &  Co.  cash,  to  apply  on  account,  $100. 

5.  Paid  Smith  &  Son  cash,  to  apply  on  account,  $75. 

6.  Gave  John  A.  Walton  a  note  for  $200,  to  apply  on  account, 

7.  Received  of  Wm.  C.  Danner  his  note   for   $140,   to   apply   on 
account. 

8.  Paid  John  A.  Walton  cash,  for  a  note,  $200. 

9.  Received  of  Wm.  C.  Danner  cash,  for  his  note,  $140. 
10.  Paid  John  Williams,  a  clerk,  his  salary  in  cash,  $35. 


Trial  Balance.     The  following  script  form  is  a  trial  balance  of  the 
preceding  model  ledger: 


22 


PRINCIPLES  OF   BOOKKEEPING 


Gredit 


/  O 

/  4^ 


,  -   "'  ,     •  ' 


/  C2.O 


/  O  O 


MODEL    TRIAL    BALANCK 


The  trial  balance  is  a  list  of  the  names  and  the  totals  of  each  open 
ledger  account;  it  shows  that  the  total  debits  equal  the  total  credits. 

In  the  script  trial  balance  the  face  of  each  account  has  been  used ; 
that  is,  the  total  debits  and  the  total  credits  have  been  transferred  to 
the  trial  balance.  Notes  Payable  is  omitted  because  the  account  balances. 

In  each  journal  entry  the  debit  amount  equals  the  credit  amount ; 
hence  when  all  these  debits  and  credits  are  collected  and  classified  in  the 
ledger,  it  must  necessarily  be  true  that  the  ledger  should  be  in  balance ; 
the  trial  balance  is  a  test  to  show  that  the  equality  of  the  debits  and 
the  credits  has  been  maintained  in  the  ledger  as  well  as  in  the  journal. 

This  trial  balance  uses  only  the  balance  of  each  ledger  account: 


Trial  Balance,  Jan.  31,  19— 

Cash 

1260 

Notes  Receivable 

100 

R.  N.  Downs 

40 

H.  M.  Field 

90 

Ira  M.  Banks 

130 

David  Lane,  Prop. 

1800 

Mdse.  Sales 

620 

Mdse.  Purchases 

1150 

Rent  Paid 

40 

Salary 

50 

2640 

2640 

FUNDAMENTAL  PRINCIPLES 


23 


Exercise  12.    Posting 

For  Written  Work 

Each  student  has  the  journal  of  Set  A  recorded  on  a  sheet  of 
journal  paper. 

Post  this  exercise,  using  a  half  sheet  of  ledger  paper.  Allow  ten 
lines  for  each  account.  Write  the  accounts  in  the  same  order  as  in 
the  model  ledger.  Post  the  journal  a  second  time. 

In  posting,  write  the  name  of  the  month  and  the  year  at  the  head  of  each 
account  only  once,  and  do  not  use  ditto  marks. 

Post  all  the  debit  items  first,  and  then  all  the  credit  items. 

After  all  the  journal  items  have  been  transferred  to  the  ledger,  the 
posting  may  be  rechecked.  This  checking  is  usually  done  to  locate 
an  error. 

Determine  whether  the  first  debit  item  in  the  journal  has  been  posted  correctly 
to  the  ledger.  If  it  has,  place  a  small  check  (  <,/  )  iu  pencil  at  the  left  of  the  first 
money  column  in  the  journal,  and  at  the  left  of  the  folio  column  in  the  ledger.  Use 
a  pencil  for  checking,  and  make  very  small  check  marks.  These  marks  should  not, 
be  erased. 

The  following  script  illustrations  will  show  how  this  checking  should  be  done  : 


2-0 


2? 


>£>-L^ 


3n 

2-<7 


J1^ 


Take  trial  balances  of  the  ledgers  just  posted. 
Keep  this  work  for  a  subsequent  exercise. 


24  PRINCIPLES  OF  BOOKKEEPING 

Exercise  13.    Journalizing 

For  Written  Work 

Journalize  Exercise  2,  page  2,  in  the  same  form  as  in  the  model  journal. 
The  names  and  the  amounts  are  different  from  those  in  the  model. 

Under  Feb.  1,  the  proprietor,  John  A.  AVeeks,  makes  a  cash  invest- 
ment of  $1050.  (This  is  an  additional  item.) 

Make  the  memorandum  and  the  entry  for  this  investment,  and  then 
journalize  the  other  business  transactions. 

When  goods  are  bought,  an  invoice  is  received  by  the  buyer  and  placed  on  file ; 
for  this  reason  the  items  of  the  invoice  need  not  be  recorded  in  the  journal. 

When  goods  are  sold,  an  invoice  is  sent  by  the  seller,  and  a  copy  of  it  is  not 
always  kept  on  file ;  for  this  reason  the  items  of  the  invoice  should  be  recorded  in 
the  journal. 

These  explanations  in  the  journal  are  of  great  value  in  the  courts  of  law. 

Use  half  sheets  of  journal  paper  and  ledger  paper.    In  the  ledger 
allow  ten  lines  for  each  account. 
Recheck  the  posting. 
Take  a  trial  balance. 
Pass  all  work  to  the  instructor. 


Exercise  14.   Journalizing 

For  Written  Work 

Journalize  Exercise  4,  page  3. 

Under  March  1,   the    proprietor,   Richard   S.  Rowe,   makes    a    cash 
investment  of  $1250.     (This  is  an  additional  item.) 
Pfcst  to  the  ledger  and  then  recheck  the  posting. 

ike  a  trial  balance. 

iss  all  work  to  the  instructor. 

Exercise  15.   Journalizing 

For  Written  Work 

Journalize  Exercise  5,  page  5. 

Under  April  1,  the  proprietor,  John  R.  Howe,  makes  a  cash  invest- 
ment of  $1150.    (This  is  an  additional  item.) 
Post  to  the  ledger  and  then  recheck  the  posting. 
Take  a  trial  balance. 
Pass  all  work  to  the  instructor. 


FUNDAMENTAL  PRINCIPLES  25 

Exercise  16.    Journalizing 

For  Written  Work 

Journalize  Exercise  8,  page  8. 

Under  June  1,  the  proprietor,  Daniel  \ .  Case,  makes  a  cash  invest- 
ment of  $1350.     (This  is  an  additional  item.) 
Post  to  the  ledger  and  then  recheck  the  posting. 
Take  a  trial  balance. 
Pass  all  work  to  the  instructor. 

SET  B.    FURNITURE 

Opening  the  Set.  Journalize  the  transactions  in  the  following  memo- 
randa in  the  same  form  as  in  the  model  journal,  on  a  half  sheet  of 
journal  paper. 

SUGGESTION.  As  a  class  exercise,  each  transaction  may  be  journalized  orally. 
Give  the  reason  for  each  debit  and  each  credit  named. 

MEMORANDA   OF   TRANSACTIONS 

N  Feb.  1.  Howard  A.  Marble  began  the  Furniture  business  and  invested 
cash,'  $1600. 
^  2.  Bought  of  Lewis  &  Taylor  for  cash: 

15  Oak  Dining  Tables  at  $12,50  10  Library  Tables  at  $22.75 

3.  Paid  H.  A.  Harper  cash,  for  rent  of  the  store  for  February,  $40. 
3.  Sold  Wm.  S.  Warren  for  cash : 

3  Oak  Dining  Tables  at  $17.75  2  Library  Tables  at  $31.25    I 

6.  Bought   of    Reese   &   Co.,   for  cash,    office   books   and   supplies 
amounting  to  $13.50. 

Debit  Office  Supplies ;  this  will  be  the  name  of  an  account  in  your  ledger. 

8.  Sold  Ellis  &  Johnson  on  account: 

4  Oak  Dining  Tables  at  $17.75  3  Library  Tables  at  $32 

10.  Bought  of  John  D.  Rice  on  account: 

10  Oak  Dining  Tables  at  $14.25  12  Library  Tables  at  $15.35 

13.  The  Proprietor  takes  from  the  business  cash,  to  apply  on  his 
monthly  salary,  $50. 

16.  Received  of  Ellis  &  Johnson  cash,  to  apply  on  account,  $83.50. 

18.  Paid  John  D.  Rice  cash,  to  apply  on  account,  $200. 

20.  Received  of  Ellis  &  Johnson  their  note  at  15  da*  for  $83.50,  to 
apply  on  account. 


26  PRINCIPLES  OF  BOOKKEEPING 

Feb.  23.  Sold  A.  R.  Kelsey  on  account : 

5  Oak  Dining  Tables  at  $20.50  5  Library  Tables  at  $21.75 

26.  Received  of  A.  R.  Kelsey  cash,  to  apply  on  account,  $125. 

27.  Paid  Henry  Mason,  a  clerk,  cash,  for  his  salary,  $30. 

27.  The  Proprietor  takes  from  the  business  cash,  for  the  balance  of 
his  monthly  salary,  $25. 

Inventories,  February  27,  19 — 
Merchandise  : 

8  Oak  Dining  Tables  at  $12.50  $100. 

5  Oak  Dining  Tables  at  $14.25  71.25 

5  Library  Tables  at  $22.75  113.75 

7  Library  Tables  at  $15.35  107.45     $392.45 

Office  Supplies  : 

Books  and  Supplies  $6. 

NOTE.    The  use  of  the  inventory  is  explained  on  page  28. 

Closing  the   Set.    Post  to   the  ledger;    allow    eight    lines    for    each 
account. 

Take  a  trial  balance. 

Keep  all  this  work  for  a  subsequent  exercise. 

SET   C.    GRAIN  AND   SEED 

Opening  the  Set.    Journalize  the  transactions  in  this  set  in  the  same 
form  as  in  the  mod^el  journal,  on  a  half  sheet  of  journal  paper. 

SUGGESTION.    As  a  class  exercise,  each  transaction  may  be  journalized  orally. 
Give  the  reason  for  each  debit  and  each  credit  named. 

MEMORANDA   OF   TRANSACTIONS 

March  1.  Student  begins  the  Grain   and  Seed  business  and  invests 
cash,  $1500. 

2.  Pay  Harold  Brown  cash,  for  rent  of  the  store  for  March,  $40. 

3.  Buy  of  H.  H.  Morley  for  cash: 

400  bu.  Corn  at  600  350  bu.  Oats  at  480 

4.  Sell  Smith  Bros,  for  cash: 

200  bu.  Corn  at  75^  100  bu.  Oats  at  600 

6.  Buy  of  Grace  &  Co.,  for  cash,  office  books  and  stationery  amount- 
ing to  $14.50.  . 

The  name  of  the  account  to  be  debited  is  Office  Supplies. 


FUNDAMENTAL  PRINCIPLES  27 

March  8.  Buy  of  Wm.  A.  Cannon  on  account : 

250  bu.  Wheat  at  $1  15  bu.  ( 'lover  Seed  at  $6 

10.  Sell  James  A.  Butler  on  account: 

150  bu.  Corn  at  750  200  bu.  Oats  at  600 

13.  Pay  Wm.  A.  Cannon  cash,  to  apply  on  account,  $200. 

15.  Buy  of  the  Larkin  Coal  Co.,  for  cash,  2  T.  coal,  for  office  use, 
at  |5.50. 

17.  Receive  of  James  A.  Butler  his  note  at  10  da.,  to  apply  on 
account,  $100. 

AVliat  name  is  given  to  his  note? 

20.  Sell  A.  R.  Burton  for  cash : 

8  bu.  Clover  Seed  at  $8 

22.  Give    Wm.    A.    Cannon    your    note    at    30  da.,    to    apply    on 
account,  $100. 

What  name  is  given  to  your  note? 

23.  Sell  Henry  A.  Barker  on  account: 

120  bu.  Wheat  at  $1.25 

24.  Receive  of  James  A.  Butler  cash,  to  balance  his  account,  $132.50. 

25.  The  Proprietor  takes  from  the  business  cash,  for  his  salary,  $50. 

26.  Receive  of  Henry  A.  Barker  cash,  to  apply  on  account,  $100. 

27.  Receive  of  James  A.  Butler  cash,  for  his  note  due  to-day,  $100. 
What  is  the  debit  in  this  transaction  ?  the  credit  ? 

29.  Buy  of  Johnson  &  Co.  for  cash : 

100  bu.  Corn  at  600  100  bu.  Oats  at  480 

30.  Sell  Harding  &  Co.  for  cash : 

50  bu.  Corn  at  750  50  bu.  Oats  at  600 

31.  Pay  James  A.  Norton,  a  clerk,  cash,  for  his  salary,  122.50. 

Inventories,  March  31,  19 — 

Merchandise : 

100  bu.  Corn  at  600  $60. 

100  bu.  Oats  at  480  48. 

130  bu.  Wheat  at  $1  130. 

7  bu.  Clover  Seed  at  $6  42.         $280. 

Office  Supplies:  10. 

Fuel,  1  T.  coal  5.50 

NOTK.    The  use  of  the  inventory  is  explained  on  page  28. 


28 


PRINCIPLES  OF  BOOK  KEEPING 


Closing  the  Set.  Post  to  the  ledger :  allow  fifteen  lines  for  the  Cash 
account  and  ten  lines  for  all  other  accounts. 

Before  taking  a  trial  balance  rule  the  accounts  in  the  ledger  that 
balance.  The  script  illustrations  below  show  how  to  rule  them.  Rule 
the  accounts  of  James  A.  Butler  and  Notes  Receivable. 


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Take  a  trial  balance. 

Keep  all  this  work  for  a  subsequent  exercise. 

INVENTORIES,  AND   THE   DETERMINATION   OF   PROFIT   AND   LOSS 

Inventories.  The  student  may  verify  the  inventory  in  Set  A,  as 
follows : 

How  many  barrels  of  flour  were  bought  ^  How  many  barrels  were 
sold?  How  many  barrels  should  be  on  hand? 

How  many  bushels  of  corn  were  bought  ?  How  many  bushels  were 
sold  ?  How  many  bushels  should  be  on  hand  ? 

...      An  inventory  is  an  itemized  statement  of  the  quantity  and  the  value/ 
'  / 1  of  the  goods  on  hand.    An  inventory  is  usually  taken  at  cost  prices.     J 
It  is  customary  to  inventory  unused  office  supplies,  unused  fuel,  etc. 

Inventories  are  taken  at  stated  periods,  as  at  the  end  of  a  year  or  at 
the  end  of  a  month. 

Unless  otherwise  instructed,  date  each  inventory  under  the  last  day  of  the  month 
in  which  the  set  was  written. 

In  business  it  is  a  common  practice  to  make  out  the  complete  inventory  on 
sheets  of  paper;  these  sheets  are  then  bound  and  filed  for  subsequent  use. 


i  FUNDAMENTAL  PRINCIPLES  29 

The  Determination  of  Profit  and  Loss.  In  working  out  the  following 
analysis  of  accounts,  refer  to  the  model  ledger  on  page  16  and  to  the 
model  trial  balance  on  page  22: 

In  the  Merchandise  Purchases  account,  what  are  the  total  purchases  ? 
In  the  Merchandise  Sales  account,  what  are  the  total  sales  ? 
What  is  the  value  of  the  merchandise  on  hand  (the  inventory)  ? 
With  the  above  data  at  hand,  if  any  profit  has  been  realized  it  can 
be  determined  as  follows: 

The  value  of  the  merchandise  sold  is  $620. 
The  total  purchases  amount  to  $1150. 
The  value  of  the  merchandise  on  hand  is  $656. 

The  total  purchases  minus  the  merchandise  on  hand  must  equal  the 
cost  of  the  merchandise  sold :  $1150  —  $656  =  $494,  the  cost  of  the 
merchandise  sold. 

The  sales  minus  the  cost  of  the  merchandise  sold  must  equal  the  profit 
on  the  merchandise  sold :  $620  —  $494  =  $126,  the  profit  on  merchandise 
sold. 

To  summarize: 

Mdse.  Sales  $620 

Purchases  $1150 

Inventory  65(5 

Cost  of  merchandise  sold  494 

Gross  profit  on  sales  $126 

Refer  to  the  Rent  Paid  account.  What  amount  was  paid  for  rent  ? 
This  is  a  loss.  Why  ? 

Refer  to  the  Salary  account.  What  amount  was  paid  for  salary? 
This  is  a  loss.  Why  ? 

If  the  profit  on  merchandise  sold  is  $126  and  the  loss  on  rent  and 
salary  is  $90,  what  is  the  net  profit ;  that  is,  the  excess  of  the  profit  over 
the  losses? 

Exercise  17.   Net  Profits 

For  Written  Work 

Find  the  net  profit  in  each  of  the  following  ;  make  a  statement  according 
to  the  model  on  page  32 : 

1.  Merchandise    Purchases,    $655.20 ;    Merchandise    Sales,    $503.50 ; 
inventory,  $254.25.    Rent  Paid:  debit,  $50. 

2.  Merchandise    Purchases,    $854.40 ;    Merchandise    Sales,    $497.50 ; 
inventory,  $470.    Salary:  debit,  $35. 

3.  Merchandise  Purchases,   $1192.20;   Merchandise  Sales,  $753.50; 
goods  on  hand,  $510.40.    Rent  Paid:  debit,  $65. 


30  PRINCIPLES  OF  BOOKKEEPING 

4.  Merchandise  Purchases,  $987.70:  Merchandise  Sales,  $790;  inven- 
tory, $318.50.    Rent  Paid:   debit,  $30.    Salary:  debit,  $20. 

5.  Merchandise    Purchases,    $964.10;    Merchandise    Sales,    $702.25; 
inventory,  $458.30.    Salary:  debit,  $25. 

6.  Merchandise    Purchases,    $1342.75;    Merchandise    Sales,    $1059; 
inventory,  $520.    Rent  Paid:  debit,  $55. 


Proprietary  Interest.  The  excess  of  the  assets  over  the  liabilities  is 
the  capital,  or  the  present  worth,  or  the  proprietary  interest. 

Merchandise  Inventory.  The  merchandise  on  hand  (the  inventory)  is 
an  asset. 

For  the  present,  treat  all  inventories  as  assets. 

The  Open  Account.  In  the  preceding  exercise  it  is  clear  that  each 
open  account  (that  is,  an  account  that  does  not  balance)  has  a  posi- 
tive bearing  on  the  condition  of  the  business ;  and  if  these  results  are 
properly  classified,  what  has  been  accomplished  by  the  business,  as  well 
as  the  present  state  of  affairs,  may  be  determined.  In  business  these 
results  are  usually  set  forth  at  stated  periods,  either  monthly  or  once  or 
twice  a  year. 

Exercise  18.   Analysis  of  Accounts 

For  Oral  Work 

In  working  out  this  exercise,  refer  to  the  model  ledger  on  page  16 
and  to  the  model  trial  balance  on  page  22. 

Refer  to  the  Cash  account  in  the  trial  balance.  What  was  the  total 
cash  received  ?  the  total  cash  paid  out  ?  the  balance  on  hand  ?  Is  this 
balance  an  asset  (property  on  hand)  or  a  liability  (amount  owed)  ? 

The  Notes  Receivable  account  shows  notes  on  hand,  and  also  that 
nothing  has  been  received  in  settlement  of  any  of  the  notes.  Does  this 
account  show  an  asset  or  a  liability  ? 

In  a  legal  sense  notes  on  hand  are  a  form  of  property. 

What  is  the  condition  of  R.  N.  Downs' 's  account  ?  Does  he  owe  the 
business,  or  does  the  business  owe  him  ?  Is  the  balance  an  asset  or  a 
liability  ? 

If  he  owes  the  business,  the  amount  is  an  asset. 

What  is  the  condition  of  H.  M.  Field's  account  ?  Does  he  owe  the 
business,  or  does  the  business  owe  him  ?  Is  the  balance  an  asset  or  a 
liability? 

If  the  business  owes  him,  the  amount  is  a  liability. 


FUNDAMENTAL  PRINCIPLES  31 

In  the  account  of  the  proprietor^  ]>ari<l  Lane,  what  is  the  amount 
he  invested  in  the  business  ? 

If  David  Lane's  investment  is  $1800,  and  the  business  has  gained 
$36  above  all  losses  for  the  period,  what  is  the  proprietary  interest  on 
Jan.  .31  ? 


- 
Profit  and  Loss  Statement.    Books  are  kept  for  the  purpose  of  recording    ' 

transactions  and  affording  a  basis  for  the  preparation  of  statements. 

The  results  of  operations  are  shown  by  the  prolits  realized  and  the 
losses  sustained. 

A  formal  statement  of  profits  and  losses  is  usually  called  a  profit  and 
loss  statement  or  an  operating  statement. 

When  books  are  properly  kept,  not  only  the  results  are  shown  but 
also  the  sources  from  which  those  results  were  obtained. 

ILLUSTRATION.  In  the  script  model  statement,  pa^e  32,  the  result  for  the  period, 
or  the  net  profit  of  $36,  appears ;  but  the  source  of  this  profit  is  in  the  Mer- 
chandise Sales  account,  $126,  while  a  loss  of  $90  is  shown,  $40  on  Rent  Paid  and 
$50  on  Salary. 

Balance  Sheet  or  Financial  Statement.    The  condition  of  the  business      X" 
is  shown  by  the  assets  (or  resources),  the  liabilities,  and  the  proprietary 
interest. 

The  formal  statement  of  the  assets,  the  liabilities,  and  the  proprietary 
interest  is  usually  called  a  balance  sheet  or  a  financial  statement. 

When  the  assets  are  placed  on  the  left  side,  offset  by  the  liabilities 
and  the  proprietary  interest  on  the  right  side,  the  term  balance  sheet 
is  used ;  but  when  the  assets,  the  liabilities,  and  the  proprietary  interest 
are  arranged  in  statement  form,  the  term  financial  statement  is  used. 
Both  forms  are  illustrated  on  page  32.  v>  ^ 

Instructors  should  state  the  form  they  prefer  the  student  to  follow.  j 

Net  Profit.    The  net  profit  is  the  excess  of  the  profits  over  the  losses.          n-i 
Net  Loss.    The  net  loss  is  the  excess  of  the  losses  over  the  profits.  ~^ 

Assets.    Assets,  or  resources,  are  property  of  value  belonging  to  the 

business,  or  amounts  due  the  business ;  that  is,  what  the  business  owns. 
Liabilities.    Liabilities  are  amounts  owed  by  the  business ;   that  is, 

the  debts  of  the  business. 

•'"*« 

Proprietary  Interest.  The  present  worth,  or  capital,  or  proprietary 
interest  is  the  excess  of  assets  over  liabilities.  It  is  the  net  worth  of 
the  business  at  a  definite  time  as  shown  by  the  books.  The  excess  of 
Liabilities  over  assets  is  insolvency. 


32 


PRINCIPLES  OF  BOOKKEEPING 


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PROFIT   AND   LOSS   STATEMENT,    FINANCIAL    STATEMENT,   AND    BALANCE    SHEET 


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FUNDAMENTAL  PRINCIPLES 

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33 


/ 


In  all-profit 

If  the  credit,  including  the  inventory  if  there  is  one,  is 
the  debit,  the  account  shows  a  profit. 

If  the  debit  is  larger  than  the  credit,  including  the  inventory  if 
there  is  one,  the  account  shows  a  loss. 

Profits  are  realized: 

If  the  assets  increase  and  the  liabilities  remain  unchanged. 

If  the  liabilities  decrease  and  the  assets  remain  unchanged. 

If  the  assets  increase  and  the  liabilities  decrease. 

Losses  are  sustained : 

If  the  liabilities  increase  and  the  assets  remain  unchanged. 

If  the  assets  decrease  and  the  liabilities  remain  unchanged. 

If  the  liabilities  increase  and  the  assets  decrease. 

In  personal  accounts : 

If  the  debit  is  the  larger,  the  account  shows  an  asset. 

If  the  credit  is  the  larger,  the  account  shows  a  liability. 

If  a  personal  account  is  given  up  as  noncollectible,  it  then  shows 
a  loss. 

Double-Entry  Bookkeeping.  The  bookkeeping  thus  far  explained  is 
in  double-entry  form,  and  the  cardinal  principle  of  double-entry  book- 
keeping is  that  the  total  debits  equal  the  total  credits. 


Exercise  19.    Review 
For  Oral  Work 


Name  quickly  the 

net  profit  or  the  net  loss  in  each  of  the  following  : 

1. 

2. 

PROFITS 

LOSSES 

PROFITS 

LOSSES 

*-s~  0)  $110 

$65 

00  $120 

$150       3  ° 

<££   (ft)       98 

32 

J~i     (b)     118 

67 

(c)     125 

175      51) 

7  f-  00     186 

112 

f<-  1    (d)     231 

72 

"*7/    (d)     224 

153 

J.  9     00     148 

119 

(e)     235 

310      7.T 

Name  quickly  the 

proprietary  interest  or  the  insolvency 

in  each  of  the 

following  : 

3. 

4. 

ASSETS 

LIABILITIES 

ASSETS 

LIABILITIES 

(.*ro         (a)   $1800 

$1150 

JTffft    (a)  $2100 

$1520 

(ft)     1450 

1750      3  o^> 

/??*    (J)     1685 

350 

IL  i  a       (c)     2250 

920 

(c)     1930 

3010     i  o-9 

/f-?  3       (d)     2975 

1142 

x  >  74'  (d)     3350 

975 

*fc  33.  («)     5575 

2142 

Mil     («)     4352 

1231 

.1 

A*«t-*^ff   ' 

^y/^J-T^T^ 

^£*      CX.A/V.  OGDuvu 

t/wV    sv(jiAiMAJAj  jCTr*  jjHJ~^ 

^7    /WJ 

'             d-1(Aj^ 

j&^A 

PURCHASES 

SALES 

INVENTO 

(a)  $1100 

$600 

$700 

(/,)  1250 

750 

350 

(e)  1075 

725 

450 

34  PKINCIPLES  OF  BOOKKEEPING 

Name  quickly  the  profit  or  the  loss  in  each  of  the  following  : 

5. 


Merchandise 


6. 

DEBIT  INVENTORY 

Fuel:                                 (a)  8155  $90 

(/;)  210  93 

(r)  86  62 

(d)  128  79 

Name  quickly  the  result  in  each  of  the  following  problems  : 

7.  John  Smith  has  assets  amounting  to  $800,  and  liabilities  amount- 
ing to  $300.    What  is  he  worth  ? 

8.  Increase  his  assets  $100  ;  what  is  he  worth  ? 

9.  Decrease  his  assets  $100;  what  is  he  worth? 

10.  Increase  his  liabilities  $100  ;  what  is  he  worth  ? 

11.  Decrease  his  liabilities  $100  ;  what  is  he  worth  ? 

12.  Increase  his  assets  $100,  and  decrease  his  liabilities  $100  ;   what 
is  he  worth  ? 

13.  Decrease  his  assets  $100,  and  increase  his  liabilities  $100  ;  what 
is  he  worth  ? 

14.  On  page  35  there  are  four  trial  balances  ;  in  each  account  name 
quickly  those  which  show  an  asset  and  those  which  show  a  liability. 

Exercise  20.    Review 
For  Written  Work 

Directions.    From  the  following  trial  balances  statements  are  to  be 
made  ;    use  sheets  of  journal  paper. 

Unless  otherwise  instructed,  use  the  form  of  statement  given  on  page  32. 

Proceed  as  follows: 

1.  Copy  the  trial  balance  at  the  head  of  the  journal  page. 

2.  Make  the  profit  and  loss  statement  which  shows  the  net  profit. 

3.  Make  the  balance  sheet  or  the  financial  statement  which  shows 
the  present  worth,  or  the  proprietary  interest. 

4.  Date  each  statement  Jan.  31,  19  —  . 

5.  When  completed,  pass  all  work  to  the  instructor  for  approval. 


FUND  AMES  T  A  L  Pit  IN  C  IP  LES 


35 


2. 


Cash 

$1655 

$650 

Cash 

$525 

H.  Granger 

352 

141 

M.  Carson 

285 

F.  Howard 

368 

255 

Dun  ton  &  Co. 

376 

Young  &  Co. 

512 

230 

Lacey  &  Co. 

532 

Hale  &  Co. 

216 

456 

H.  Ranger 

$365 

Student,  Prop. 

2000 

Student,  Pro]). 

1850 

Mdse.  Sales 

1873 

Mdse.  Sales 

1893 

Mdse.  Purchases 

2377 

Mdse.  Purchases 

2215 

Rent  Paid 

25 

Fuel 

75 

Salary 

100 

Salary 

100 

Inventory  : 

Merchandise 


$5605       $5605 


$752 


Cash 

Lee  &  Dane 
Jackson  &  Co. 
Macey  &  Son 
H.  S.  Arnold 
A.  B.  Lawton 
Lewis  &  Co. 
Student,  Prop. 
Mdse.  Sales 
Mdse.  Purchases 
Office  Supplies 
Salary 

Inventories  : 

Merchandise 
Office  Supplies1 


$874 
485 
325 
654 
125 
312 
100 


2560 

32 

100 


$105 

84 

139 

637 

422 

205 

2100 

1875 


$5567       $5567 

$960  20 
12. 


Inventor//  : 

Merchandise 

4. 

Cash 

Jas.  Curry 
Louis  Derby 
Henry  Ware 
Adams  &  Co. 
H.  C.  Cain 
H.  Wyman 
Student,  Prop. 
Mdse.  Sales 
Mdse.  Purchases 
Fuel 
Rent  Paid 

Inventories  : 

Merchandise 
Fuel1 


$4108       $4108 


$564.75 


$835 
358 
298 
252 

$327 
278 
113 
1700 
1385 
1945 
65 

50 

$3803       $3803 

$751.50 
33. 


Exercise  21.    Review 
For  Written  Work 

In   this   exercise,  use  the  trial   balances   the   student   has   made   in 
Sets  A,  B,  and  C.     Follow  the  directions  given  hi  Exercise  20. 

This  work  should  be  done  without  reference  to  the  text. 

After  each  statement  has  been  approved  by  the  instructor,  keep  the 
work  for  a  subsequent  exercise. 


These  inventories  are  explained  on  page  36. 


36  PRINCIPLES  OF  BOOKKEEPING 

Make  statements  from  the  trial  balances  of  the  following  sets :  « 

1.  Set  A,  page  10.  2.  Set  B,  page  25.  3.  Set  C,  page  26. 

The  inventories  will  be  found  in  the  text  at  the  close  of  each  set. 


Additional  Inventories.  The  fuel  and  office  supplies  unused  at  the 
time  the  statements  are  made  are  inventories. 

ILLUSTRATION.  If  10  T.  of  coal  were  bought  at  the  beginning  of  the  month 
and  4  T.  were  unconsumed  at  the  end  of  the  month,  the  4  T.  would  constitute  the 
inventory  for  the  Fuel  account. 

When  there  is  an  inventory,  the  loss  011  the  Fuel  account  is  found 
as  follows: 

Fuel: 

Dr.  $46.25 

Inventory  16.20 

Loss  $30.05 

The  loss  is  the  difference  between  the  debit  of  the  account  and  the 
inventory. 

In  making  the  balance  sheet  or  financial  statement,  record  the  fuel 
inventory  as  an  asset. 

In  making  a  detailed  balance  sheet  or  financial  statement,  never  add  together 
the  inventories  of  different  names,  but  use  each  as  a  separate'  amount. 

It  is  not  usual  for  the  Fuel  account  to  have  any  credits ;  but  if 
the  account  is  closed  with  fuel  on  hand,  or  if  some  fuel  that  has  been 
bought  is  sold,  then  the  account  shows  a  credit. 

All  that  has  been  said  regarding  the  use  of  the  fuel  inventory  will 
apply  in  every  particular  to  the  office  supplies  inventory. 

-   CLOSING  THE  LEDGER 

Preliminary  Work.  The  results  and  the  condition  of  the  business  in 
Sets  A,  B,  and  C  have  been  shown  by  the  statements  just  made.  The 
next  step  is  to  show  the  results  of  the  business  in  the  ledger.  To  do 
this  it  will  be  necessary  to  close  the  ledger. 

To  close  the  ledger  it  is  necessary  to  close  only  such  accounts  as 
affect  the  results  shown  by  the  business ;  that  is,  the  accounts  that 
show  profit  or  loss  and  the  Proprietor  s  account. 

Preparatory  to  closing  the  ledger  the  student  should  have  some 
practice  in  ruling. 


FUNDAMENTAL  PRINCIPLES  37 

•  The  ruling  of  the  following  ledger  page  is  the  same  as  the  ruling 
required  in  closing  a  ledger  account.  Practice  this  ruling  until  it  is 
done  well.  Use  red  ink  for  this  work. 


Notice  that  the  single  line  extends  over  only  the  dollars  and  cents  columns,  while 
the  double  lines  cover  all  the  perpendicular  columns,  the  explanatory  column  excepted. 

In  business  it  is  customary  to  show  actual  results ;  that  is,  to  make 
statements  only  once  or  twice  a  year,  or  monthly.  The  ledger  is  closed 
after  such  statements  have  been  made. 

Closing  the  Ledger  Defined.  The  results  of  the  business  as  shown  in 
the  statements  are  now  to  be  incorporated  in  the  books  of  the  business, 
and  this  operation  is  called  closing  the  ledger. 

There  are  two  general  methods  of  closing  the  ledger,  —  the  direct  method  and 
the  journal  method.  The  first  is  explained  and  illustrated  on  page  167,  but  it  is 
not  used  in  this  text. 

Journal  Method.  The  following  explanations  and  illustrations  set 
forth  the  journal  method  of  closing  the  ledger. 

By  this  method  all  closing  entries  are  made  in  the  journal  and  posted 
to  the  ledger  accounts.  Thus  the  ledger  continues  to  contain  a  classi- 
fication of  debits  and  credits  recorded  in  the  several  transactions  in  the 
journal.  The  closing  journal  entries  should  record  such  data  as  are 
necessary  to  place  upon  the  ledger  the  facts  set  forth  in  the  statements, 
In  this  illustration  these  data  may  be  summarized  into  three  divi- 
sions: the  accounts  relating  to  merchandise  transactions,  the  accounts 
showing  losses,  and  the  transfer  of  the  net  profit  to  the  Proprietor's 
account. 

The  closing,  of  the  ledger  is  one  of  the  most  important  features  of 
bookkeeping,  and  its  mastery  is  essential  if  one  is  to  do  good  work. 

Merchandise  Accounts.  The  first  division  of  the  closing  entries  in  this 
exercise  deals  with  the  merchandise  accounts  and  the  entries  necessary 

265790 


38 


PRINCIPLES  OF  BOOKKEEPING 


to  record  the  closing  inventory,  the  cost  of  merchandise  sold,  and  the 
profit  on  the  merchandise  sold.  The  following  merchandise  accounts 
and  the  closing  inventory  are  used  in  the  illustration : 


MERCHANDISE  PURCHASES 


19— 

Jan. 

6 

5 

1200 

19 

6 

1350 

26 

7 

850 
• 

MERCHANDISE  SALES 


19— 

Jan. 

10 

6 

950 

23 

7 

750 

29 

S- 

900 

On  Jan.  31  the  merchandise  inventory  was  $1100. 
1.  The   first   entry   is  to   record   the   inventory   of   Jan.    31    in   the 
journal.    The  entry  is  as  follows: 

Mdse.  Inventory  1100 

^-  Mdse.  Purchases  1100 

t-£fy  To  record   the   merchandise   inventory 

and  to  credit  the  Merchandise  Purchases 
account  for  the  merchandise  remaining 
unsold  on  Jan.  31. 

Open  an  account  with  Merchandise  Inventory. 

After  posting  this  entry  the  accounts  will  appear  as  follows 

MERCHANDISE  INVENTORY 


19— 

Jan. 

31 

9 

1100 

MERCHANDISE  PURCHASES 


19— 

19— 

Jan. 

6 

5 

1200 

Jan. 

31 

9 

1100 

19 

6 

1350 

26 

7 

850 

3**^ 

FUNDAMENTAL  PRINCIPLES 


39 


_2^  The  difference  between  the  sides  of  the  Merchandise  Purchases 
account  ($2300)  will  now  show  the  cost  of  the  merchandise  sold.  Use 
this  amount  and  make  the  following  entry  : 

Mdse.  Sales  2300 

Mdse.  Purchases  2300 

To  transfer  the  balance  of  the  Mer- 
chandise Purchases  account,  representing 
the  cost  of  the  merchandise  sold,  to  the 
Merchandise  Males  account. 

After  posting  this  entry  the  accounts  will  appear  as  follows : 
MERCHANDISE  PURCHASES 


19— 

19— 

Jan. 

6 

5 

1200 

Jan. 

31 

9 

1100 

19 

6 

1350 

31 

9 

2300 

, 

26 

7 

850 

3400 

3400 

MERCHANDISE  SALES 


19— 

19— 

Jan. 

31 

9 

2300 

Jan. 

10 

6 

950 

23 

7 

750 

29 

8. 

900. 

300 


300 


3.  The  difference  between  the  sides  of  the  Merchandise  Sales  account 
will  now  show  the  profit  on  the  merchandise  sold.    Use  this 
amount  and  make  the  following  entry  : 

Mdse.  Sales 

Profit  and  Loss 

To  transfer  the  balance  of  the  Merchan- 
dise Sales  account,  representing  the  profit 
on  €he  merchandise  sold,  to  the  Profit  and 
Loss  account. 

After  posting  this  entry  the  accounts  will  appear  as  follows  : 
MERCHANDISE  SALES 


19— 

19— 

Jan. 

31 

9 

2300 

Jan. 

10 

6 

950 

81 

9 

300 

23 

7 

750 

29 

8 

900 

2600 

2600 

40 


PRINCIPLES  OF  BOOKKEEPING 


^J^o.    00.       Explanation         9T         $         <£      e41o.    G)a.       Explanation         9T        $ 


n 


/  fo  o 


/  0  0 


/.so 


-zz/u 

>  Zl-f  '- . 


f 


^ 


MODEL  LEDGER  CLOSED 


FUNDAMENTAL  PRINCIPLES 


41 


S)a.        GxplanatiOn 


$ v       e^lo.    £Dg.        Gxplanahon 9T         $ 


MODEL  LEDGER  CLOSED 


42 


PRINCIPLES  OF  BOOKKEEPING 
PROFIT  AND   Loss 


19— 

Jan. 

31 

9 

300 

Accounts  which  show  Losses.  The  second  division  of  the  closing 
journal  entries  in  this  exercise  deals  with  the  accounts  which  show 
losses.  The  following  Rent  Paid  account  is  used  as  an  illustration : 


RENT  PAID 


19— 

Jan. 


25 


Make  this  entry  to  close  this  account  into  the  Profit  and  Loss  account. 

25 


Profit  and  Loss 
Rent  Paid 

To  close  the  Rent  Paid  account  into  the 
Profit  and  Loss  account. 


25 


After  posting  this  entry  the  accounts  will  appear  as  follows: 

RENT  PAID 


19— 

Jan. 

3 

5 

25 

19— 

Jan. 

31 

9 

2.-) 

PROFIT  AND  Loss 


19— 

Jan. 

31 

9 

2o 

Jan. 

31 

9 

300 

FUNDAMENTAL  PRINCIPLES  43 

If  a  Salary  account  were  debited  with  $45,  it  would  be  closed  by 
making  and  posting  an  entry  similar  to  that  given  for  the  Rent  Paid 
account.  After  posting  such  an  entry  the  accounts  will  appear  as 
follows : 

SALARY 


19— 
Jan. 

15 

4 

45 

19— 

Jan. 

31 

9 

45 

• 

PROFIT  AND  Loss 


19— 

Jan. 

31 

9 

25 

Jan. 

31 

9 

300 

31 

9 

45 

Proprietor's  Account.  The  third  division  of  the  closing  entries  in  this 
exercise  deals  with  the  transfer  of  the  net  profit  to  the  Proprietor's 
account.  Assume  that  David  Lane  is  the  proprietor,  and  his  account  in 
the  ledger  shows  an  investment  of  $1500  on  Jan.  1.  The  following 
entry  is  necessary  to  transfer  the  net  profit  of  $230  (the  balance  of  the 
Profit  and  Loss  account)  to  the  Proprietor's  account : 

Profit  and  Loss 

David  Lane,  Prop.  230 

To  transfer  the  balance  of  the  Profit  and 
Loss  account,  representing  the  net  profit  of 
the  period,  to  the  Proprietor's  account. 

After  posting  this  entry  the  accounts  will  appear  as  follows : 

PROFIT  AND  Loss 


19— 

19— 

Jan. 

31 

9 

25 

Jan. 

31 

9 

300 

31 

9 

45 

31 

9 

230 

300 

300 

44 


PRINCIPLES  OF  BOOKKEEPING 
DAVID  LANK,  PROPRIETOR 


19— 

JHII. 

1 

2 

1500 

31 

9 

280 

In  the  Proprietor's  account  enter  the  Present  Worth  in  red  ink  on  the 
debit  side ;  rule  the  account,  and  then  transfer  the  Present  Worth  to  the 
credit  side  of  the  account,  below  the  rulings,  in  black  ink,  under  Feb.  1. 

The  account  will  then  appear  as  follows : 

DAVID  LAXK,  PROPRIETOR 


19— 

19— 

Jan. 

31 

Present  Worth1 

1730 

Jan. 

1 

•_) 

1500 

31 

9 

230 

1730 

1730 

Feb. 

1 

Present  Worth 

1730 

This  completes  the  closing  of  the  ledger. 

Exercise  22.    Closing  the  Model  Ledger 

For  Written  Work 

Transfer  the  accounts  represented  in  the  model  ledger,  pages  40 
and  41,  to  a  sheet  of  ledger  paper,  and  then  close  the  model  ledger ; 
the  merchandise  inventory  is  found  on  page  11.  Make  the  closing 
entries  on  a  sheet  of  journal  paper. 

After  posting  these  entries  and  ruling  the  accounts,  your  work  should  agree  with 
the  model  ledger  closed,  pages  40  and  41. 

Exercise  23.    Ledger  Closings 
For  Written  Work 

On  slips  of  ledger  paper 'and  journal  paper  open  the  following  accounts, 
and  then  make  the  necessary  entries  to  close  them.    Use  Jan.  31  for  the  date. 
If  necessary,  the  student  may  rule  blank  paper  for  the  ledger  and  the  journal. 

1.  Merchandise  Purchases,   $565 ;   Merchandise  Sales,  $312 ;   inven- 
tory, $315. 

2.  Rent  Paid,  $30. 

1  To  be  written  in  red  ink. 


FUNDAMENTAL  PRINCIPLES 


45 


3.  Merchandise  Purchases,  $980  ;  Merchandise  Sales,  $675;  inven- 
tory, $482. 

4.  Salary,  $40. 

5.  Merchandise  Purchases,  $612  ;    Merchandise  Sales,  $496;  inven- 
tory, $375. 

Find  the  net  profit  or  the  present  worth  in  each  of  the  following  accounts, 
and  then  make  the  necessary  entries  to  close  them  : 

6.  Profit  and  Loss:  debit,  $116.25;  credit,  $226. 

7.  Student,  Proprietor :   credit,  $1600  ;  net  profit,  $150. 

8.  Profit  and  Loss:  debit,  $210;  credit,  $825. 

9.  Student,  Proprietor:  credit,  $1500;  net  profit,  $165. 
10.  Student,  Proprietor:  credit,  $1700-;  net  profit,  $235. 

Exercise  24.    Closing  the  Ledger 
For  Written  Work 

Directions.    On   a   half   sheet   of  ledger   paper    open    the    following 
accounts ;  allow  eight  lines  for  each  account : 


Student,  PROPRIETOR 


19— 

Jan. 

1 

1 

1800 

MERCHANDISE  SALES 


19— 

Jan. 

11 

3 

725 

22 

3 

240 

' 

29 

5 

70 

MERCHANDISE  PURCHASES 


19— 

Jan. 

9 

2 

850 

15 

4 

275 

27 

4 

162 

46 


PKINCIPLES  OF    I'.OOKKEEPINC 


RENT   PAID 


19— 

Jan. 

2 

1 

35 

1 

SALARY 


19— 

Jan. 

29 

6 

20 

31 

7 

30 

Inventory  : 

Merchandise 


a.  Open  the  following    accounts :    Merchandise  Inventory  and  Profit 
and  Loss. 

b.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 


II 
W.  H.  HANSEN,  PROPRIETOR 


19— 

Feb. 

1 

1 

1900 

MERCHANDISE  SALES 


19— 

Feb. 

9 

3 

208 

50 

20 

5 

297 

25 

26 

6 

.  510 

65 

FUNDAMENTAL  PRINCIPLES 
MERCHANDISE  PURCHASES 


RENT  PAIJ> 


47 


19— 

Feb. 

5 

2 

.310 

16 

4 

422 

50 

23 

5 

538 

75 

19— 

Feb. 


30 


FUEL 


SALARY 


19— 

Feb. 

11 

3 

7 

50 

20 

5 

3 

50 

19— 

Feb. 


40 


Inventory : 

Merchandise 


1395.40 


a.  Open  the  following  accounts:    Merchandise  Inventory  and  Profit 
and  Loss. 

b.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 


1  This  account  is  closed  the  same  as  the  Bent  Paid  account  in  this  exercise. 


48 


PRINCIPLES  OF  BOOKKEEPING 


Sundry  Expense  Inventory.  Observe  the  following  directions  in 
closing  the  Office  Supplies  account : 

Make  the  following  entry  to  record  the  inventory  upon  the  books 
of  account: 

Sundry  Expense  Inventory  8     50 

Office  Supplies  8     50 

To  record  the  inventory  and  to  credit 
the  Office  Supplies  account  for  the  office 
supplies  remaining  unused  on  March  31. 

After  posting  this  entry  the  accounts  will  appear  as  follows: 
SUNDRY  EXPENSE  INVENTORY 


Mar. 


31 


OFFICE  SUPPLIES 


19— 

19— 

Mar. 

6 

1 

11 

20 

Mar. 

31 

7 

8 

50 

17 

2 

4 

70 

23 

3 

3 

10 

Sundry  Expense  Inventory  applies  to  all  expense  accounts  in  which 
inventories  are  found,  at  the  end  of  a  given  period. 

Make  the  following  entry  to  close  the  Office  Supplies  account  into 
the  Profit  and  Loss  account: 


Profit  and  Loss 
Office  Supplies 

To  close  the  Office  Supplies  account  into 
the  Profit  and  Loss  account. 


10 


.-50 


10 


50 


After  posting  this  entry  the  Office  Supplies  account  will  appear  as 

follows :  . 

OFFICE  SUPPLIES 


19— 

19— 

Mar. 

6 

1 

11 

20 

Mar. 

31 

7 

8 

50 

17 

2 

4 

70 

31 

7 

10 

50 

23 

3 

3 

10 

19 

19 

FUNDAMENTAL  PRINCIPLES 


49 


It  is  now  necessary  to  transfer  the  amount  in  the  Sundry  Expense 
Inventory  account  to  the  Office  Supplies  account  so  that  the  latter  account 
will  show  the  office  supplies  on  hand  April  1. 

To  accomplish  this  transfer  make  the  following  entry : 


Office  Supplies 

Sundry  Expense'  Inventory 

To  transfer  the  inventory  of  office  sup- 
plies to  the  Office  Supplies  account. 


50 


After  posting  this  entry  the  accounts  will  appear  as  follows : 


OFFICE  SUPPLIES 


19— 

10— 

Mar. 

(3 

1 

11 

20 

Mar. 

31 

7 

8 

50 

17 

2 

4 

70 

31 

7 

10 

50 

23 

3 

3 

10 

19 

19 

Apr. 

1 

7 

8 

50 

SUNDRY  EXPENSE  INVENTORY 


19— 

Mar. 

31 

7 

'     8 

50 

19— 

Apr. 

1 

7 

8 

50 

Exercise  25.    Closing  the  Ledger 
For  Written  Work 

Directions,    a.  On  a  half  sheet  of  ledger  paper  open  the  following 
accounts ;  allow  eight  lines  for  each  account : 


Student,  PROPRIETOR 


19— 

Mar. 

1 

1 

1750 

50 


PRINCIPLES  OF  BOOKKEEPING 
MERCHANDISE  SALES 


ID- 

Mar. 

8 

3 

376 

45 

16 

4 

282 

27 

5 

432 

90 

30  ' 

6 

235 

55 

MERCHANDISE  PURCHASES 


19— 

Mar. 

4 

2 

498 

65 

13 

4 

337 

50 

24 

5 

524 

35 

29 

6 

228 

40 

i 

OFFICE  SUPPLIES  l 


19— 

Mar. 

5 

2 

13 

25 

16 

4 

6 

80 

22 

o 

5 

50 

REXT  PAID 


19— 

Mar. 


38 


Inventories : 

Merchandise 
Office  Supplies 


$524.50 
12.20 


b.  Open  the  following  accounts :  Merchandise  Inventory,  Sundry  Ex- 
pense Inventory,  and  Profit  and  Loss. 

c.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 


1  See  page  48. 


FUNDAMENTAL   PKIXCIPLES 

II 
Student,  PROPRIETOR 


51 


10— 
May 


MERCHANDISE   SALES 


19— 

May 

!) 

3 

108 

25 

10 

4 

390 

35 

26 

5 

553 

10 

•20 

5 

65 

40 

MERCHANDISE  PURCHASES 


19— 

May 

6 

2 

175 

20 

1,3 

3 

512 

30 

23 

4 

841 

75 

OFFICE  SUPPLIES 


19— 

May 

8 

3 

14 

65 

23 

6 

11 

20 

FUEL 


19— 

May 

6 

2 

22 

35 

19 

• 

4 

31 

40 

1  On  page  48  instructions  were  given  regarding  the   Office  Supplies  account  and  its 
inventory.    These  instructions  will  apply  to  the  closing  of  the  Fuel  account. 


PRINCIPLES  OF   BOOKKEEPING 
SALARY 


May 


31 


Inventories  : 

Merchandise 
Office  Supplies 
Fuel 


|672.50 
16.40 
22.50 


a.  Open    the    following    accounts :    Merchandise   Inventory,    Sundry 
Expense  Inventories,  and  Profit   and  Loss. 

b.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 

Exercise  26.    Closing  the  Ledger 
For  Written  Work 

The  ledgers  which  the  student  posted  and  kept  will  now  be  used 
for  this  exercise. 

In  each  ledger,  open  the  necessary  accounts  for  posting  the  closing 
journal  entries. 

1.  Set  A.    Close  the  ledger.    Compare  the  results  with  those  shown 
in  the  statement  of  this  set. 

2.  Set  B.    Close  the  ledger.    Compare  the  results  with  those  shown 
in  the  statement  of  this  set    This  set  shows  a  net  loss. 

3.  Set  C.    Close  the  ledger.    Compare  the  results  with  those  shown 
in  the  statement  of  this  set. 

After  closing  each  ledger,  keep  it  for  a  subsequent  exercise. 


Balancing  the  Cash  Account.  The  Cash  account  in  the  ledger  may  be 
balanced  according  to  the  model  at  the  top  of  the  opposite  page. 

After  balancing  the  account  the  condition  of  it  is  shown  as  a  single 
item,  the  balance. 

Any  account  may  be  balanced  when  the  space  assigned  to  it  is  filled 
and  it  is  necessary  to  transfer  it  to  a  new  space. 

The  use  of  red  ink  is  largely  a  matter  of  custom.  Many  bookkeepers  use  no  red 
ink  at  all,  insisting  that  it  is  a  waste  of  time  to  change  from  one  to  another.  The 
use  of  red  ink  is  advised  for  exercises  in  this  book. 


FUNDAMENTAL  PK1N CIPLES 


Forwarding  the  Footings.  Instead  of  balancing  an  account  when  it  is 
necessary  to  transfer  it  to  a  new, space,  the  total  of  each  column  may 
be  carried  forward.  This  is  illustrated  by  the  following  script  form : 


'7 


fo  7^ 


/  /  0 


77* 


1     fc 

s 
54  PRINCIPLES  OF  BOOKKEEPING 

Exercise  27.    Balancing  the  Cash  Account 

For  \Vrlttrn  Work 
Balance  the  Cash  account  in  the  ledgers  of  Sets  A,  B,  and  C. 

SET  D.    TEA  AND  COFFEE 

Directions.  Journalize  the  following  transactions,  post  (allowing  ten 
lines  for  each  account  in  the  ledger),  take  a  trial  balance,  make  the 
statements,  and  close  the  ledger. 

Balance  the  Cash  account  and  then  take  a  second  trial  balance. 

Write  on  sheets  of  journal  paper  and  ledger  paper. 

After  the  ledger  has  been  closed,  some  of  the  accounts  will  have 
been  changed ;  but  if  the  work  of  the  set  has  been  done  correctly,  the 
balance  of  the  ledger  has  not  been  impaired. 

In  making  the  second  trial  balance,  use  only  the  accounts  which 
remain  open  upon  the  ledger. 

If  the  student  is  able  to  do  this  work  without  assistance,  he  is  ready  for  subse- 
quent work ;  if  not,  he  should  rewrite  one  or  more  of  the  preceding  sets. 

MEMORANDA  OF  TRANSACTIONS 

Apml  1,  Win.  A.  Springer  began  the  Tea  and  Coffee  business,  in- 
vesting cash,  |1250. 

3.  Bought  of  Amos  R.  Hyde  on  account: 

800  Ib.  Tea  at  35  0  1200  Ib.  Coffee  at  280 

4.  Sold  L-.  AiM»8 wanoon 4. or  cash: 

150  Ib.  Tea  at  50  £  300  Ib.  Coffee  at  350 

5.  Paid  E.  S.  Washburn  cash,  for  rent  of  the  store  for  April,  $40. 

6.  Paid  Hays  &  Co.  cash,  for  office  books  and  supplies,  $12.50. 

8.  Sold  John  Freeman  on  account: 

240  Ib.  Tea  at  500  150  Ib.  Coffee  at  350 

9.  Paid  Little  &  Lane  cash  for  6  T.  coal  at  $7.25. 

11.  Sold  Harry  M.  Grace  on  account : 

250  Ib.  Coffee  at  350 

12.  Paid  Amos  R.  Hyde  cash,  to  apply  on  account,  $500. 

13.  Bought  of  Amos  R.  Hyde  on  account : 

750  Ib.  Coffee  at  280 
15.  Received  of  John  Freeman  cash,  to  apply  on  account,  $100. 


FUNDAMENTAL  PRINCIPLES  55 


April  16.    The  Proprietor   takes  from    the   business   cash,  to   apply 
on  his  monthly  salary,  $37.50. 

17.  Gave  Amos  R.  Hyde  a  note  at  10  da.,  to  apply  on  .account,  $150. 

19.  Sold  Harper  &  Co.  on  account  : 

200  Ib.  Tea  at  500  500  Ib.  Coffee  at  350 

20.  Received  of  Harry  M.  Grace  cash,  in  full  for  the  sale  of  April  11. 

22.  Bought  of  Greene  &  Co.  on  account  : 

2000  Ib.  Tea  at  350 

23.  Sold  Miller  &  Dunn  for  cash  : 

800  Ib.  Tea  at  500 

24.  Received  of   Harper  &  Co.  their  note   at   30  da.,   to   apply   on 

account,  $100. 

^ 

26.  Sold  Harry  M.  Grace  on  account: 

200  Ib.  Tea  at  500 

27.  Paid  Amos  R.  Hyde  cash,  for  a  note  due  to-day,  $150. 

29.  Gave  Greene  &  Co.  a  note  at  20  da.,  to  apply  on  account,  $200. 

30.  Paid  John  S.  Potter,  a  clerk,  cash,  for  his  salary,  $40. 

30.  The  Proprietor  takes  from  the  business  cash,  for  the  balance  of 
his  monthly  salary,  $37.50. 


Inventories,  April  30,  19  — 

Merchandise  : 

1210  Ib.  Tea  at  350  $423.50 

750  Ib.  Coffee  at  280  210.  $633.50 

Fuel: 

Coal  unused  21. 

Office  Supplies  : 

Supplies  unused  7.50 

NOTE.   The  notes  receivable  are  always  assets  ;  the  notes  payable,  liabilities. 

CORRECTION  OF  ERRORS 

The  correction  of  errors  in  books  of  record  is  a  matter  of  special 
importance.  Even  careful  workers  make  occasional  errors,  but  correc- 
tions can  be  made  so  that  the  neatness  of  the  books  and  their  legal 
value  are  not  affected.  When  an  error  is  made,  consult  the  instructor 
before  attempting  to  correct  it.  Do  not  erase. 


56 


PRINCIPLES  OF  BOOKKEEPING 


If  a  journal  entry  is  wrong,  correct  it  as  follows  :  draw  a  red  line 
through  the  wrong  name,  and  then  write  the  correct  name  in  black  ink 
either  above  or  at  the  right  of  the  correction,  thus  : 


/  02- 


JM? 


/  O  2-J-0 


If  a  journal  entry  is  reversed,  it  may  be  corrected  by  writing,  in 
red  ink,  Or.  after  the  debit  item  and  Dr.  after  the  credit  item.  Then 
post  correctly. 


2-0 


If  it  is  found  that  a  wrong  amount  has  been  entered  in  the  ledger, 
correct  it  as  follows: 

1.  Rule  a  red  line  through  the  wrong  amount. 

2.  Write  the  correct  amount  in  black  ink  above  the  amount  canceled. 


•~J    Is  !} 


If   an  amount  has  been  entered  on  the  wrong  side  of  the  ledger, 
correct  it  as  follows: 

1.  Draw  a  red  line  through  the  amount  that  is  wrong. 

2.  Enter  the  correct  amount  in  black  ink  on  .the  proper  side  of  the 
ledger. 


FUNDAMENTAL  PRINCIPLES  57 

NOTE.  Sometimes  a  correction  may  be  made  by  a  counter  entry  in  the  journal. 
To  illustrate:  Suppose  one  had  made  this  entry,  Notes  Receivable,  Dr.,  Cash,  Cr., 
and  it  was  a  wrong  entry.  It  may  be  canceled  as  follows  :  Cash,  Dr.,  Notes  Receiv- 
able, Cr.  As  the  wrong  entry  is  thus  disposed  of,  the  correct  entry  may  now  be  made. 

» 

FORMS  OF   STATEMENT 

The  profit  and  loss  statements  and  the  balance  sheet  or  financial 
statement  are  made  in  many  different  forms,  depending  on  the  char- 
acter and  the  volume  of  the  business,  and  the  facts  that  are  to  be 
set  forth. 

In  a  business  under  the  control  of  one  proprietor  very  simple  state- 
ments may  answer  every  requirement.  In  a  partnership,  when  a  number 
of  persons  are  interested,  a  more  complete  setting  forth  of  the  facts  of 
the  business  is  necessary.  In  a  corporation,  organized  under  the  laws 
of  the  state  or  the  nation,  the  statements  must  show  the  results  and  the 
condition  according  to  the  demands  of  the  authority  under  which  the 
corporation  is  organized.  In  cities  where  many  departments  require 
separate  accounting,  still  another  form  of  statement  may  be  de- 
manded to  set  forth  the  facts  that  public  business  requires  to  be 

made   known. 

>» 

Working  Sheet.  The  form  illustrated  on  the  following  page  is  called 
a  working  sheet.  Sometimes  it  is  referred  to  as  a  working  balance  sheet 
or  as  a  six -column  statement.  This  model  gives  in  a  condensed  form 
the  final  results  of  the '  business. 

The  net  profit  for  a  given  period,  the  total  assets  and  liabilities,  and 
the  proprietary  interest  at  a  given  period  are  the  chief  outstanding 
facts  in  this  form  of  a  working  sheet. 

The  first  two  columns  of  the  working  sheet  illustrated  contain  the  triak; 
balance  debits  and  credits  respectively,  the  third  and  fourth  columns 
are  used  to  record  the  amounts  necessary  to  determine  the  net  profit 
or  loss  of  the  period,  the  fifth  column  contains  the  assets,  and  the  last 
column  contains  the  liabilities  and  proprietary  interest  of  the_]jiuikiess. 

The  working  sheet  well  illustrates  the  relationslirpBetween  the  trial 
balance  and  the  profit  and  loss  statement  and  the  balance  sheet,  since 
all  the  amounts  appearing  in  the  trial  balance  are  distributed  in  one  or 
more  of  the  columns.  The  fact  that  closing  inventories,  those  not  given 
in  the  trial  balance,  must  always  be  considered  in  making  accurate 
statements  applies  with  equal  force  to  the  compilation  of  a  correct 
working  sheet. 

The  working  sheet  should  not  be  used  as  a  finished  statement  to 
present  to  the  Proprietor  or  creditor,  but  rather  as  a  means  of 


58 


PRINCIPLES  OF   BOOKKEEPING 


obtaining  rapidly  all  data  necessary  for  making  a  correct  profit  and 
loss  statement   and  an   accurate  balance    sheet  or  financial  statement. 


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A    WOKKINU    8IIKET 


SET  I.  RETAIL  FUEL  AND  FEED  BUSINESS 

The  object  of  this  set  is  to  illustrate  in  a  practical  manner  one  of 
the  simplest  forms  of  bookkeeping.  In  the  preceding  illustrative  work 
the  student  has  recorded  all  transactions  and  entries  on  sheets  of 
journal  paper  and  ledger  paper,  but  now  he  is  given  a  set  of  bound 
books,  in  which  all  records  will  be  made. 

The  books  used  are  the  journal,  the  ledger,  and  the  statement  book. 
No  business  forms  are  handled,  but  different  forms  are  illustrated,  and 
entries  are  made  directly  from  them. 

Price  List.  The  prices  at  which  goods  are  to  be  bought  and  sold  in 
this  set  are  given  in  the  following  table : 


\ 


PRICE  LIST  FOR  JANUARY 


ARTICLE 

COST 

SELLING  PRICE 

Grate  Coal 

$7.10 

$8.25 

Stove  Coal 

$7.25 

$8.50 

Nut  Coal 

$7.20 

$8.50 

Hay 

$12.50 

$16.50 

Opening  the  Set.    In  working  out  this  set  the  student  should  observe 
the  following: 

1.  For  the  introductory  memorandum,  refer  to  the  model  journal  on 
page  12.    Follow  this  model  carefully. 

2.  In  this  beginning  work  it  is  well  for  the  student  to  journalize 
the  transactions  first  on  a  sheet  of  journal  paper;  after  correction,  this 
work  may  be  copied  into  the  bound  journal.    The  posting  should  be 
directly  to  the  ledger. 

3.  A.  M.  Benton  is  represented  as  the  proprietor. 

4.  Use  the  sam^e  explanatory  forms   as  in   the  model  journal   (see 
page  12). 

5.  Take  special  pains  in  all  writing,  for  legibility  is  most  important 
in  all  work  in  bookkeeping. 

6.  Make  neat,  small  figures. 

59 


60 


PRINCIPLES  OF  BOOKKEEPING 


MEMORANDA   OF  TRANSACTIONS  FOR  JANUARY 

Jan.  1.    A.  M.  Ben  ton,   Buffalo,   N.Y.,  began  thfe   Retail   Fuel   and 
Feed  business,  investing  cash,  $2750. 

2.  Paid  Edward  N.  Shaw  cash,  for  rent  of  the  store  for  January,  $30. 

3.  Bought  office  supplies  as  per  the  following  bill : 


19^=. 


i  — 


Debit  Office  Supplies  for  the  above  bill. 

A  detailed  statement  of  goods  bought  or  sold  is  called  either  a  hill  or  an  htnn<-i\ 

A  detailed  statement  of  goods  bought  to  be  used  or  consumed,  or  a  statement  of 
services  rendered,  is  usually  called  a  bill. 

Thus,  a  physician's  statement  of  services  rendered,  and  the  charges  for  the  same, 
is  called  a  bill ;  a  statement  of  a  quantity  of  silk  bought  or  sold  by  a  merchant  is 
called  either  a  bill  or  an  invoice. 

4.  Bought  of  Allen  &  Parker  for  cash: 

50  T.  Grate  Coal  3  ^C  35  T-  Nut  Coal 

40  T.  Stove  Coal    ^  f  0  20  T.  Hay 

5.  Sold  John  S.  Adams  for  cash:  f 

10  T.  Grate  Coal  5  T.  Hay 

6.  Sold  A.  M.  Paterson  on  account : 

1 5  T.  Stove  'Coal  1 0  T.  Nut  Coal 


/  L~ 


SET  I.    RETAIL  FUEL  AND   FEED  BUSINESS 


61 


Jan.  8.  Sold  John  S.  King  for  cash : 

5  T.  Grate  Coal  5  T.  Hay 

9.  Sold  Charles  M.  Gray  on  account : 
^  10  T.  Stove  Coal  10T.  Hay 

11.  Bought  of  Henry  A.  Stevens  on  account: 

15  T.  Stove  Coal  15  T.  Hay 

12.  Received  cash  as  shown  by  the  following  check : 


I  f 


79  —    Nn 


Rational 


/oo  -  'Dollars 


'Pay  to  the  order  of 


A  check  is  an  order  on  a  bank  by  a  depositor  for  the  payment  of  money. 
13.  Received  the  following  note  to  apply  on  account : 


$  /  /  n 


/.?.  79  — 


after  date^3Lpromise  to  pay  to 


the  order  of. 

f^^^ 


^r7  ^•f^SL' 


-'Dollars 


Value  received 


//2.J//0— 

-f 7    7^- 


15.  Gave  Henry  A.  Stevens  a  note  at  10  da.,  to  apply  on  account,  $150. 
Id.  Bought  of  Johnson  &  Main  for  cash: 

5  T.  Nut  Coal 

! 

18.  Gave  the  Monroe  Typewriter  Exchange  cash  for  the  following: 

1  Typewriter,  $50  1  Office  Desk,  $25 

Debit  Office  Furniture  for  the  amount  of  this  bill. 

19.  Received  of  A.  M.  Paterson  his  check  for  the   balance   of  the 
invoice  sold  him  on  Jan.  6,  $87.50. 


62 


PRINCIPLES  OF   BOOKKEEPING 


!  Jan.  20.  Received  of  Charles  M.  Gray  cash,  to  apply  on  account,  $75. 

20.  Sold  James  W.  Traver  on  account : 


N 

f 

20  T.  Grate  Coal                             12  T.  Nut  Coal   '  x  (,  •> 
^  29.  Bought  of  Lane  &  Son  merchandise  as  follows  : 

3 

^JJvJ*^   O^s,,    /Q_ 

d^Z^p^^^^          _ 

rr 

)r. 

^erms 

M  ^^^^^^^ 

Cjo                           '~^/^^-^^f^7  ^^  ^  y*  —  Scti^G  —  "s^J^s                                     i  -> 

O-tt                    4~- 

10 

^~~&-fZ^?s                                                                 /2  — 

2=uQ2 

_ 

LQ. 

^^^2^^^A                ^ 

-7  / 



,^Z/ 



•^-~ 

—  —  ' 

' 

// 


\i  ^J.  Received  of  Charles  M.  Gray  cash,  for  his  note  which  is  due 
to-day,  $110. 

24.  Received  of  James  W.  Traver  his  check,  to  apply  on  account,  $100. 

25.  Gave  Henry  A.  Stevens  cash,  for  a  note  which  fell  due  to-day,  $150. 

26.  Sold  A.  M.  Paterson  on  account:         |-jv   }/v 

5  T.  Hay  5  T.  Grate  Coal 

27.  Gave  Henry  A.  Stevens  cash,  to  apply  on  account,  $50. 

29.  Gave  Lane  &  Son  a  note  at  30  da.,  to  apply  on  account,  $1  :•}.">. 
31.  Paid  Student  cash,  for  services  to  date,  $20. 
Debit  Salaries. 

31.  The   Proprietor  takes  from  the  business  cash,  for  his  monthly 
salary,  $50. 

Pass  the  journal  sheet  to  the  instructor  for  correction  and  criticism  : 
then  copy  carefully  into  the  bound  journal. 


SET  I.    RETAIL   FUEL  AI\J)   FEE1)   JJUSINESS  63 

Inventories.    Record  the  inventories  on  a  sheet  of  journal  paper.    Keep 
this  sheet  for  future  reference. 

Inventories,  January  31,  19 — 
Merchandise : 

20  T.  Grate  Coal  at  $7.10  $142. 

30  T.  Stove  Coal  at  $7.25  217.50 

18  T.  Nut  Coal  at  $7.20  129.60 

30  T.  Hay  at  $12.50  875.         $864.10 

Office  Furniture : 

Typewriter,  at  cost  $50 

Office  Desk,  at  cost  25  $75 

Office  Supplies  : 

Unused  supplies  $5 

NOTE.    The  student  may  verify  the  merchandise  inventory. 

Closing  the  Set.    Open  accounts  in  the  ledger,  four  accounts  on  each 
page,  in  the  following  order: 

Cash  A.  M.  Beiiton,  Prop. 

Notes  Receivable  Profit  and  Loss 

*ii  I  IIITIH  i  Fin  i j_ii  i Mi  Sundry  Expense  Inventory2 

A.  M.  Paterson  Merchandise  Sales 

.^ Charles  M.  Gray  Merchandise  Purchases 

James  W.  Traver  Rent  Paid 

Merchandise  Inventory2  Office  Supplies 

,         Office  Furniture  Salaries 


Lane  &  Son 
Henry  A.  Stevens 

NOTE.  The  accounts  are  opened  in  this  order  to  facilitate  the  making  of  the 
statements. 

After  posting,  foot  the  accounts  having  more  than  one  item,  in  pencil, 
making  very  small  figures. 

Take  a  trial  balance  of  the  ledger,  omitting  all  accounts  that  balance : 
record  it  in  Blank  No.  1,  on  the  page  indicated  by  the  index. 

1  Accounts  Receivable  are  the  personal  accounts  that  show  the  amounts  owed  to  the 
business.    Do  not  write  Accounts  Receivable  in  the  ledger.    These  are  the  personal  accounts 
in  which  the  debit  side  is  the  larger. 

2  These  accounts  will  be  used  when  the  ledger  is  closed.   Sundry  Expense  Inventory  ap- 
plies to  all  expense  accounts  in  which  inventories  are  found,  at  the  end  of  a  given  period. 

8  Accounts  Payable  are  the  personal  accounts  that  show  the  amounts  owed  by  the 
business.  Do  not  write  Accounts  Payaljle  in  the  ledger.  These  are  the  personal  accounts 
in  which  the  credit  side  is  the  larger.  The  Proprietor'' s  account  is  not  included. 


64  PRINCIPLES  OF   BOOKKEEPING 

Make  the  profit  and  loss  statement  showing  the  net  profit. 

Make  the  balance  sheet  or  financial  statement  showing  the  present 
worth,  or  proprietary  interest. 

Record  the  statements  in  Blank  No.  1;  on  the  page  indicated  by 
the  index. 

Make  the  necessary  journal  entries  and  postings  to  close  the  ledger. 

Balance  the  Cash  account. 

Take  a  trial  balance  of  the  ledger. 

Present  all  books  to  the  instructor  for  approval. 

Exercise  28.    Review 

For  Written  Work 
I.    JOURNALIZING 

Journalize  orally  or  in  writing  each  of  the  following  transactions,  and 
state  the  reason  for  each  debit  and  each  credit  named: 

1.  Student  begins  business  with  the  following  investment :  cash, 
$1500;  merchandise,  $1350. 

When  several  asset  items  represent  the  Proprietor's  investment,  each  item  is 
debited  under  its  appropriate  name,  and  the  Proprietor  is  credited  for  the  total. 
The  following  is  the  correct  entry  for  problem  1 : 


Cash 

Mdse.  Inventory 

Student,  Prop. 
Investment  at  the  beginning  of  business. 


1500 
1350 


2850 


The  above  is  a  compound  entry;  it  may  consist  of  any  of  the  following:  several 
debits  and  one  credit ;  one  debit  and  several  credits ;  several  debits  and  several 
credits. 

A  simple  entry  consists  of  one  debit  and  one  credit. 

i 

2.  Edward  M.  Burke  began  business  with  the  following  investment: 

cash,  $650;  merchandise,  $1152;  A.  J.  Wilson's  note,  $675. 

3.  Adam  H.  Ross  began  business  with  the  following  assets:    cash, 
$625 ;  merchandise,  $1450 ;  R.  M.  Herring's  note,  $375 ;  coal  on  hand 
for  use  in  heating  the  store,  $42. 

4.  Lincoln  &  Son  began  business  with  the 'following  assets:    cash, 
$875 ;   account  against   Robinson  &  Co.,  $285 ;    merchandise,   $1155 ; 
J.  R,.  Kent's  note,  $450 ;  coal  on  hand  for  use  in  heating  the  store,  $35. 

5.  Student  begins  business  with  the  following  assets  :   cash,  $1100  ; 
merchandise,   $1360 ;   George  Manning's  note,   $350 ;   account  against 
Price  &  Co.,  $235. 


SET  I.    KETAIL  FUEL  AND  FEED  BUSINESS 


65 


6.  Gave  Warren  &  Son  your  note  at  30  da.,  to  apply  on  account, 
$250. 

7.  Gave  Martin  V.  Atkins  your  note  at  DO  da.,  with  interest,  to  apply 
on  account,  $375. 

No  entry  is  made  for  the  interest  until  the  note  is  paid. 

8.  Received  of  Henry  A.  Cole  his  note  at  20  da.,  with  interest,  to 
apply  on  account,  $310. 

9.  Received  of  Lane  &  Lyman  their  note  at  30  da.,  with  interest, 
to  apply  on  account,  $215. 

10.  Received  of  Thomas  &  Co.  cash  for  their  note  and  the  interest: 
face  of  the  note,  $400 ;  interest,  $12. 

The  following  is  the  correct  entry  for  problem  10  : 

Cash 

Notes  Receivable  400 

Interest  Earned  12 

For  the  note  of   Thomas  &  Co.  and  the 

interest. 

When  money  is  borrowed  we  pay  for  the  use  of  it,  and  we  debit  Interest  Paid  for 
the  sum  paid ;  when  money  is  loaned  by  us  we  receive  pay  for  the  use  of  it,  and  we 
credit  Interest  Earned  for  the  sum  received. 

When  the  statement  is  made  that  we  pat/  interest,  we  really  mean  that  we  pay 
cash  for  the  interest,  or  for  the  use  of  money. 

11.  Paid  your  note  and  the  interest  in  cash,  in  favor  of  James  S. 
Manner:  face  of  the  note,  $255;  interest, 

The  following  is  the  correct  entry  for  problem  11. 

Notes  Payable 

Interest  Paid  10 

Cash 

Paid  James  S.  Manner  for  my  note  and 
the  interest. 

12.  Received  of  H.  H.  Marden  cash,  for  his  note,  $212.50. 

13.  Received  of  Henry  N.  Monroe  cash,  for  his  note  and  the  interest: 
face  of  the  note,  $300 ;  interest,  $3. 

14.  Paid  your  note  and   the  interest  in  cash,  in  favor  of  Bronson 
&  Co.:  face  of  the  note,  $250;  interest,  $5. 

15.  Paid  your  note  in  favor  of  Jenkins  &  Son  in  cash,  $400. 

16.  Received  a  check  from  A.  D.  Franklin  for  his  note,  $200. 

17.  Paid  your  note  in  favor  of  H.  C.  Pomeroy  in  cash,  $125. 

18.  Received   a  check  from   Lewis  &  Son    for   their   note   and   the 
interest:   face  of  the  note,  $325;   interest,   $6.50. 


66 


PRINCIPLES  OF  BOOKKEEPING 


19.  Paid   your   note    and   the   interest    in   cash,    in   favor   of   A.  D. 
Matthews:   face  of  the  note,   §225;   interest,   $9. 

20.  Gave  M.  A.  Grant  your  note  at  30  da.,  with  interest,  to  apply  on 
account,  $425. 

21.  Received  of  David  S.  Malloy  his  note  at  60  da.,  with  interest,  to 
apply  on  account,  $385.20. 


II.    STATEMENTS 

Directions.    Make  the  statements  from  the  following  trial  balances, 
observing  these  directions: 

1.  Office  Furniture  is  an  asset,  and  in  these  exercises  should  be  taken 
at  the  values  shown  in  the  trial  balances. 

2.  Interest  Paid  always  shows  a  loss. 

3.  Interest  Earned  always  shows  a  profit, 

4.  Date  each  statement  Feb.  28,  19 — . 


Cash 

Notes  Receivable 
Mason  &  Ferris 
H.  A.  Barker 
Henry  &  Son 
Riggs  &  Co. 
Sanford  &  Co. 
John  M.  Grace 
Office  Furniture 
Notes  Payable 
J.  K.  Luce 
D.  A.  Ward 
Ames  &  Co. 
Charles  S.  Beard 
Kane  &  Co. 
Moore  &  Co. 
Student,  Prop. 
Mdse.  Sales 
Interest  Earned 
Mdse.  Purchases 
Salary 
Interest  Paid 

Inventories,  Feb.  28 : 

Merchandise 
Office  Furniture 


1. 


$2443. 
347.50 
400. 

50.20 
500. 
210. 
312.40 
150.75 
110. 


1142.50 
50. 
13.50 


$177. 

108. 

120. 
43.60 

147.25 

123.75 

109. 
4500. 

390.50 
10.75 


$5729.85   $5729.85 

$943.25 
110. 


SET  I.    RETAIL  FUEL  AND  FEED  BUSINESS 


67 


Cash 

Notes  Receivable 
A.  K.  Williams 
Parson  &  Co. 
John  S.  Arden 
Office  Furniture 
Notes  Payable 
Race  &  Hunter 
S.  A.  Alden 
George  M.  Lee,  Prop. 
H.  K.  Paine,  Prop. 
Mdse.  Sales 
Interest  Earned 
Mdse.  Purchases 
Office  Supplies 
Salary 
Interest  Paid 

Inventories,  Feb,  28 : 

Merchandise 
Office  Furniture 
Office  Supplies 


$1143.35 
405. 
133.40 
175.80 
341.15 
100. 


2053.70 
17.50 
30. 

7.15 


$100. 
143.25 

65.20 
1250. 
1250. 
1637.50 

21.10 


$4467.05   |4467.05 

|701.20 

100. 

12. 


III.    CLOSING  THE  LEDGER 

Directions,   a.  On  a  sheet  of  ledger  paper  copy  the  following  accounts, 
allowing  eight  lines  for  each  account : 


Student,  PROPRIETOR 


19— 

Jan. 

1 

2 

2400 

MERCHANDISE  SALES 


19— 

Jan. 

11 

2 

414 

35 

19 

3 

231 

40 

24 

4 

142 

29 

5 

341 

25 

68 


PRINCIPLES  OF  BOOKKEEPING 

MERCHANDISE  PURCHASES 


19— 

Jan. 

6 

9 

525 

50 

15 

3 

365 

25 

22 

4 

2!>7 

10 

26 

5 

25-2 

40 

SALARIES 


19— 

Jan. 

31 

4 

45 

OFFICE  SUPPLIED 


19— 

Jan. 

3 

3 

12 

50 

18 

6 

7 

50 

Inventories,  Jan.  81  : 

Merchandise 
Office  Supplies 


$621.45 
11.20 


II 


A.  R.  THOMAS,  PROPRIETOR 


19— 

Feb. 

1 

2 

2250 

MERCHANDISE  SALES 


19— 

Feb. 

13 

1 

235 

20 

20 

2 

443 

30 

25 

3 

511 

45 

27 

4 

364 

20 

SET  I.    RETAIL  FUEL  AND  FEED  BUSINESS  69 

INTEREST   EARNED  l 


ly— 

Feb. 

10 

7 

10 

20 

25 

8 

9 

45 

MERCHANDISE  PURCHASES 


19— 

Feb. 

10 

1 

312 

55 

17 

2 

641 

05 

23 

3 

704 

65 

26 

4 

140 

SALARIES 


19— 

Feb. 

15 

3 

30 

28 

4 

50 

INTEREST  PAID 


19— 

Feb. 

11 

2 

7 

70 

23 

3 

11 

25 

Inventory,  Feb.  28  : 
Merchandise 


>72.10 


b.  Open  the  following  accounts:   Profit  and  Loss  and  Merchandise 
Inventory. 

c.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 

1  The  closing  journal  entry  for  accounts  which  show  profits,  other  than  on  the  mer- 
chandise sold,  may  be  illustrated  from  an  Interest  Earned  account  which  shows  a  credit  of  f  5. 
The  following  entry  would  be  made  to  close  this  account  into  the  Profit  and  Loss  account  : 

Interest  Earned 

Profit  and  Loss 

To  close  the  Interest  Earned  account  into  the  Profit 
and  Loss  account. 

What  entry  should  be  made  to  close  the  Interest  Paid  account  ? 


70  PRINCIPLES  OF  BOOKKEEPING 

Exercise  29.    Bookkeeping  Problems 

SUGGESTION.    The  following  problems  may  be  used  either  for  oral  or  for  written 
work ;  they  also  offer  material  for  profitable  discussion. 

1.  In  Set  B,  verify  the  inventory  wliicli  is  given  on  page  26.    How 
may  one  determine  the  value  of  the  inventory  ? 

2.  On  page  28  is  a  ledger  account  with  M.  M.  Pond.     Study  this 
account  and  then  answer  the  question,  Was  this  account  opened  with 
Mr.  Pond  as  a  debtor  or  as  a  creditor  ? 

3.  On  page  28  is  a  ledger  account  with  D.  A.  Zook.    Study  this 
account  and  then  answer  the  question,  Was  this  account  opened  with 
Mr.  Zook  as  a  debtor  or  as  a  creditor? 

4.  On  page  35  there  are  four  trial  balances.    State  what  each  debit 
amount  stands  for  and  what  each  credit  amount  stands  for. 

5.  Give  the  reason  for  each  debit  and  each  credit  in  the  transac- 
tions on  page  54,  Set  D.    Name  the  proper  explanation  for  each  entry. 

6.  Turn  to  your  written  ledger  for  Set  I  and  quickly  name  the 
persons  or  firms  of  whom  the  proprietor  bought  goods,  and  the  persons 
or  firms  to  whom  he  sold  goods. 

7.  In  your  ledger  for  Set  I,  name  the  following,  relating  to  personal 
accounts : 

a.  The  names  of  the  accounts  on  which  the  business  owes  something. 

b.  The  names  of  the  accounts  on  which  something  is  owed  to  the 
business. 

c.  The  names  of  the  accounts  that  have  been  paid  in  full. 

d.  The  names  of  the  accounts  on  which  something  has  been  paid 
on  account. 

e.  The  names  of  the  accounts  on  which  something  has  been  received 
on  account. 

8.  On  page  65,  state,  in  each  transaction,  when  the  word  interest 
is  used,  whether  it  means  interest  paid  or  interest  earned. 

9.  Give  the  name  of  the  note  on  which  interest  is  paid ;  the  name 
of  the  note  on  which  interest  is  received. 

10.  On  pages    66  and  67  there  are  trial  balances.    State  what  each 
debit  amount  stands  for  and  what  each  credit  amount  stands  for. 


CHAPTER  111 

INTRODUCTION  OF  THE  CASHBOOK 

In  all  the  preceding  work,  in  this  text,  it  1ms  been  seen  that  every 
transaction  of  a  business  may  be  first  recorded  in  a  book  called  the 
journal. 

The  journal  entry  is  undoubtedly  the  clearest  und  the  most  definite  form  of 
expressing  the  debits  and  the  credits  of  business  transactions ;  for  this  reason  all 
the  preceding  work  has  been  journalized. 

In  business  it  is  more  convenient,  simple,  and  effective  to  classify 
the  transactions  as  they  occur;  this  is  effected  by  using  one  or  more 
books  in  addition  to  the  journal. 

In  the  next  set  the  cashbook  will  be  introduced,  a  model  of  which 
is  given  on  pages  72  and  73. 

The  cashbook  contains  a  record  of  all  the  receipts  and  the  payments 
of  cash  in  a  given  business.  It  is  the  detailed  Cash  account  of  the 
business. 

The  left-hand  page  contains  a  record  of  all  the  cash  debits,  the 
receipts,  the  names  of  the  accounts  to  be  credited,  and  a  brief  explana- 
tory statement. 

The  right-hand  page  contains  a  record  of  all  the  cash  credits,  the  pay- 
ments, the  names  of  the  accounts  to  be  .debited,  and  a  brief  explanatory 
statement. 

The  difference  between  the  two  sides  of  the  cashbook  should  show 
the  amount,  balance,  of  cash  on  hand. 

In  the  next  set  all  cash  items  will  be  entered  in  the  cashbook,  all  the  other 
transactions  will  be  journalized  as  usual.  Both  the  cashbook  and  the  journal  will 
be  used  as  books  of  original  entry. 

On  pages  72  and  73  is  a  script  cashbook ;  the  entries  are  from 
transactions  similar  to  those  in  Exercise  30.  Turn  to  these  pages  and 
note  the  cashbook  entries. 

As  a  preliminary  drill  it  will  be  found  helpful  to  study  the  journalizing  of 
each  cash  transaction  that -has  been  entered  in  the  script  cashbook,  as  shown  on 
page  72. 

Cashbook  entries,  like  journal  entries,  are  all  classified  debits  and 
credits. 

71 


72 


PBINCIPLES  OF  BOOKKEEPING 


If  the  cash  receipts,  from  the  model  cashbook,  and  the  cash  payments  were  put 
in  journal  form,  there  would  be  two  compound  journal  entries  as  follows : 


Cash 
Student 
A.  D.  Marks 
Anna  Carr 
T.  M.  Kellar 
C.  D.  Acres 


$1758.20 


Rent  Paid 

$22.50 

$1400. 

II.  C.  Beard 

321. 

112.40 

Fuel 

36. 

18.50 

Office  Supplies 

10.20 

117.30 

Salary 

15. 

110. 

Boone  &  Co. 

170. 

Lake  &  Co. 

130. 

Cash 

$704.70 


The  first  record  of  a  business  transaction  reveals  the  debit  and  the 
credit,  no  matter  in  what  book  the  transaction  may  be  recorded. 

Exercise  30.   The  Cashbook 

For  Written  Work 

Opening  the  Cashbook.    Observe  the  following  directions: 

1.  Use  a  double  sheet  of  journal  paper,  four  pages ;  make  the  entries 
on  pages  2  and  3. 

2.  This  work  is  not  to  be  recorded  in  the  bound  blank  books. 

3.  Student  is  represented  as  the  proprietor. 

Below  is  given  a  script  cashbook,  complete  in  every  detail.  '  Refer  to  this  model 
in  recording  the  transactions  on  opposite  page. 


3t 


/ '4-0  O 

/  /  2. 

/  <P 

"7 
/  /  o 


2-0 


LEFT-HAND   PAGE   OF   CASHBOOK 


INTRODUCTION  OF  THE  CASH  HOOK 


73 


MEMORANDA   OF   TRANSACTIONS 

Jan.  1.  Student   begins   a   General    Merchandise   business,    investing 
cash,  $1600. 

2.  Pay  Owen  Howe  cash,  for  rent  of  the  store  for  January,  $27.50. 

3.  Buy  of  Larkin  &  Co.,  for  cash,  merchandise  amounting  to  $437.50. 

4.  Sell  Amos  Drake,  for  cash,  merchandise  amounting  to  $86.45. 

5.  Pay  Henry  Stanton  cash  for  6  T.  coal,  fur  use  in  heating  the 
store,  at  $7.50. 

6.  Sell  Mary  F.  Jacobs,  for  cash,  merchandise  amounting  to  $12.40. 

8.  Buy  of  Carson  &  Co.,  for  cash,  stationery  and  office  supplies, 
$3.25. 

9.  Sell  Jacob  T.  Merton,  for  cash,  merchandise  amounting  to  $52.25. 
10.  Pay  Melvin  Stone,  your  clerk,  cash,  on  his  salary,  $10. 

12.  Buy  of  Parker  &  Sanford,  for  cash,  merchandise  amounting  to  $21 0. 
15.  Student  takes  from  the  business  cash,  to  apply  on  his  monthly 
salary,  $25. 

17.  Sell  Jesse  R.  Wheaton,  for  cash,  merchandise  amounting  to  $46.25. 
20.  Sell  Mason  &  Co.,  for  cash,  merchandise  amounting  to  $65.40. 
26.  Sell  Loomis  &  Son,  for  cash,  merchandise  amounting  to  $28.10. 

30.  Pay  Melvin  Stone  cash,  for  the  balance  of  his  monthly  salary,  $15. 

31.  Student  takes  from   the   business  cash,  for   the    balance    of   his 
monthly  salary,  $25. 


UIGHT-HAND   PA(iK   OF   CA8HBOOK 


74  PRINCIPLES  OF  BOOKKEEPING 

Closing  the  Cashbook.    Proceed  to  close  the  work  as  follows : 

1.  Balance  the  cashbook ;  follow  the  script  model. 

NOTE.  Under  Cash  Paid  the  line  which  records  the  Balance  may  be  written 
in  red  ink. 

2.  Post  the  cashbook ;  use  one  sheet  of   ledger  paper,  two  pages ; 
allow  ten  lines  for  each  account. 

The  amounts  on  the  debit  side,  cash  received,  should  be  posted  to  the  credit  of 
the  ledger  accounts  named ;  debit  the  Cash  account  for  the  total  amount  of  the  cash 
received. 

The  amounts  on  the  credit  side,  cash  paid,  should  be  posted  to  the  debit  of  the 
accounts  named ;  credit  the  Cash  account  for  the  total  amount  of  the  cash  paid  out. 

Write  C.B.  in  the  explanation  column  of  the  ledger;  this  indicates  the  name  of 
the  book  from  which  the  posting  was  done. 

3.  Take  a  trial  balance  and  have  it  approved. 

4.  Pass  all  work  to  the  instructor. 


•f 


CHAPTER  IV 

WHOLESALE   CARPET   BUSINESS 


This  set  is  separate  from  Set  I,  but  the  character  of  the  work  is 
similar.  The  books  used  are  the  journal,  the  cashbook,  and  the  ledger. 

Price  List.  The  prices  at  which  merchandise  is  to  be  sold  in  this 
set  are  given  in  the  following  table  : 

SELLING  PRICE  LIST  FOR   FEBRUARY 


Axminster 
$2.50 

Brussels 
$1.35 

Ingrain 

75  £ 

Linoleum 
60$ 

Oilcloth 
30$ 

Wilton 
$2.65 

Opening  the  Set.    Observe  the  following  directions: 

1.  This  is  the  first  set  written  by  the  student  when  using  the  cash- 
book.     If  the  instructor  approves,  the  set  may  be  first  written  on  a 
double  sheet  of  journal  paper,  as  follows :  pages  1  and  4,  the  journal ; 
pages  2  and  3,  the  cashbook. 

2.  After  the  entries  are  finished,  close  the  cashbook,  and  then  have 
the  work  approved  by  the  instructor. 

3.  James  R.  Denison  is  represented  as  the  proprietor. 

MEMORANDA  OF  TRANSACTIONS  FOR  FEBRUARY 

Feb.  1.  James  R.  Denison,  Boston,  Mass.,  began  the  Wholesale 
Carpet  business  with  the  following  assets :  cash,  $500  ;  merchandise  on 
hand,  $2595.50;  office  furniture,  $200;  coal  for  heating  the  store,  $15; 
the  following  note: 


,•?  n  n 


-after  date^sLpromise  to  pay  to 


the  order  o/  • 


'/oo 


.'Dollars 


"Gallic  received 


76 


76  PRINCIPLES  OF  BOOKKEEPING 

In  opening  the  books  these  assets  are  journalized  as  follows : 

February  1,  19 — 


James  R.  Denison  began  the  Wholesale  Carpet 

business  with  the  following  assets  : 

Feb. 

1 

v/ 

Cash 

500 

Notes  Receivable 

300 

Mdse.  Inventory 

2595 

50 

Office  Furniture 

200 

Fuel 

15 

James  R.  Denison,  Investment 

3610 

50 

The  cash  item  of  $500  should  be  entered  under  Cash  Received,  in  the  cashbook, 
as  follows : 

Cash  Received 


Feb. 

1 

v/ 

James  R.  Denison 

Investment 

500 

i 


The  checking  of  an  item,  as  above,  is  a  simple  means  of  noting  that  it  is  not  to 
be  posted. 

' Feb.  2.  Paid  Lee  &  Crane  cash  for  the  following  items:   stationery, 
^$4.50;  office,  books,  $3.50.        ^£2 
^*  3.  Paid  George  R.  Daniels  cash,  for  rent    of    the    store  for  Feb- 
ruary, $75. 

JL.  4.  Bought  of  W.  B.  Mason  &  Co.,  Philadelphia,  on  account,  invoice 

of  carpets  amounting  to  $572.50. 

5.  Bought  of  A.  R.  Prescott  &  Co.,  New  York,  on  account,  invoice 
of  carpets  amounting  to  $612.95. 

6.  Sold  W.  F.  Pratt,  Springfield,  on  account: 

200  yd.  Brussels  150  yd.  Ingrain 

100  yd  Axminster 

6.  Sold  James  R.  Holcomb,  City,  for  cash: 
100  yd.  Oilcloth  40  yd. 

19.  Sold  John  W.  King,  City,  on  account: 

40  yd.  Oilcloth  16  yd.  Linoleum' 

60yd.  Brussels 

9.  Sold  M.  F.  Newbury,  Providence,  on  account: 

100  yd.  Wilton  120  yd.  Axminster 

10.  Remitted  to  A.  R.  Prescott  &  Co.  a  note  at  10  da.,  with  interest 
at  6%,  in  full  for  the  invoice  of  Feb.  5. 


> 


° 


/i 


SET  II.    WHOLESALE  CAKPKT    P.l'SINESS  77 

•*  Feb.  11.  Received  of  Ernest  B.  Jackson  cash  for  his  note  and  interest 
due  to-day:  face  of  note,  $300;  interest,  50</-;  total,  $300.50. 

There  are  two  entries  under   Cash  Jicci-im/,  in   the  cashbook.    What  names  are 
to  be  used? 

12.  Received  of  W.  F.  Pratt  his  note  at  10  da.,  with  interest  at  6%, 
$250,  and  the  balance  of  the  invoice  of  Fc/>.  (>  in  cash. 

Enter  the  amount  of  the  note  in  the  journal,  and  enter  to  the  proper  account  in  the 

.  r* 

cashbook  the  difference  between  the  amount  of  the  note  and  the  invoice  of  Feb.  6.  >r\ 

g 

'   13.  Sold  George  S.  Rollins,  City,  for  cash : 

100  yd.  Brussels  _100  yd.  Linoleum 

Enter  this  sale  in  the  journal;  also4n  the  casHboofejiaderX-rew*^  Stdlollins. 


'  15.  Bought  of  A.  R.  Prescott  &  Co.,  New  York,  on  account,  invoice 
of  carpets  amounting  to  $172.50. 
^p    16.  Sold'W.  F.  Pratt,  Springiield,  on  account: 

40yd.  Ingrain  65yd.  Brussels 

100  yd.  Axminster 

20.  The  First  National  Bank  presented  for  payment  the  note  in  favor 
of  A.  R.  Prescott  &  Co.,  due  to-day.  Paid  the  note  and  interest  in 
cash:  face  of  the  note,  $612.95;  interest,  $1.02;  total,  $013.97. 

There  are  two  entries  in  the  cashbook.    What  names  are  to  be  used? 

^  $0.  Sold  John  A.  Newton,  City,  for  cash : 

70  yd.  Wilton  ^S*.  ^  * 

22.  Received   of  W.   F.   Pratt  cash  for  his  note   and   interest  due 
to-day:  face  of  the  note,  $250;  interest,  420;  total,  $250.42. 

.  N|  22.  Bought  of  C.  W.  Allen  &  Co.,  City,  for  cash,  an  invoice  of  carpets      0 
amounting  to  $410.50.  . 

T£nt.pr  in  the  journal  and  in  ihe-€»sfeJ&t>ok. 

23.  Received  the  following  check,  to  apply  on  account : 


No. 


traders  Rational  {F}ank 

'Pay  to  the  order  ofJuL 


78  PRINCIPLES  OF  BOOKKEEPING 

Under  what  name  is  this  check  entered  ? 

As  checks  are  used  so  commonly  in  business,  a  careful  study  of  this  form  is 
commended. 

Feb.  25.  Sold  John  W.  King,  City,  the  following  (received  cash,  $65 ; 

balance  on  account)  :  .  lf_v   ^ 

3  7,  SCO 

50  yd.  Ingrain  40  yd.  Axminster 

Enter  the  whole  invoice  in  the  journal ;  under  Cash  Received,  in  the  cashbook, 
enter  the  $65/\nnder  John  W.  King. 

>• 
26.  Received  of  John  W.  King  his  note  at  30  da.,  with  interest  at 

,  for  the  amount  of  the  invoice  of  F<>1>.  9. 

26.  Remitted  to  W.  B.  Mason  &  Co.  a  note  at  30  da.,  with  interest 
at  6%,  in  full  for  the  invoice  of  Feb.  4. 

27.  Sold  Lewis  &  Parsons,  City,  for  cash: 

200  yd.  Ingrain  50  yd.  Linoleum 

100  yd.  Oilcloth 

27.  Paid  Student,  for  services  to  date,  $40  ;  paid  A.  M.  Olcott,  for 
services  to  date,  $30. 

27.  The  Proprietor  takes  cash  from  the  business  for  his  monthly 
salary,  $125. 

Balancing  the  Cashbook.  Balance  the  cashbook  according  to  the  script 
model  on  pages  72  and  73. 

Pass  all  work  to  the  instructor  for  approval. 

All  work  is  to  be  recorded  in  the  blank  books  on  the  pages  indicated  for  Set  II, 
in  Blank  No.  1. 

Inventories.    The  following  inventories  are  to  be  used  in  this  set: 

Inventories,  February  28,  19 — 

Merchandise : 

Per  schedule  prepared  by  Denison  $2214.92 

Office  Furniture  200. 

Closing  the  Set.  Open  accounts  in  the  ledger,  four  accounts  on  each  page, 
in  the  following  order,  beginning  on  the  page  indicated  by  the  index : 

NOTE.  On  page  63  a  note  states  that  the  order  of  accounts  to  be  followed  in  open- 
ing the  ledger  was  so  arranged  as  to  facilitate  the  making  of  the  statements.  It 
should  be  noticed  that  each  of  the  various  groups  of  accounts  follow  in  order,  and  if 
they  are  properly  entered,  it  is  unnecessary  to  turn  all  the  pages  of  the  ledger  in 
order  to  know  that  all  the  accounts  of  a  group  have  been  included  in  the  appropriate 
statement. 


SET  II.    WHOLESALE  CAKPET   P.USINESS  79 

Cash  Accounts  Payable  ' 

Notes  Receivable  A.  K.  Pn-scott  &  Co. 

Accounts  Receivable  1  W.  Jl.  Mason  &  Co. 

W.  F.  Pratt  .  I    C.  W.  Allen  &  Co. 

John  W.  King  James  R.  Denison.  Prop. 

M.  F.  Newbury  Profit  and  Loss 

1  James  R.  Holoomb  '  '     Merchandise  Sales 

I  George  S.  Rollins  Interest  Earned 

|  John  A.  Newton  Merchandise  Purchases 

|Lewis  &  Parsons  Rent  Paid 

Merchandise  Inventory  <  >ftice  Supplies 

Office  Furniture  Fuel 

Notes  Payable  Salaries 

Interest  Paid 

Foot  the  accounts  in  pencil. 

Take  a  trial  balance;  omit  all  accounts  that  balance.    After  approval, 
record  it  in  Blank  No.  1,  on  the  page  indicated  by  the  index. 
Make  the  profit  and  loss  statement  showing  the  net  profit. 
Make  the  balance  sheet  or  financial  statement  showing  the  present 
worth,  or  proprietary  interest. 

Record  the  statements  in  Blank  No.  1,  on  the  page  indicated  by  the 
index. 

Make  the  necessary  entries  and  postings  to  close  the  ledger. 

In  this  set  there  is  a  merchandise  inventory  at  the  beginning,  $2595.50,  and  it 
is  necessary  to  transfer  this  amount  to  the  Merchandise  1'urcha.ies  account  before 
the  other  closing  journal  entries  are  made. 

The  Merchandise  Inventory  account,  as  here  given,  represents  the  merchandise 
that  was  purchased  and  on  hand  before  the  business  of  the  month  of  February  was 
undertaken;  hence  it  must  be  transferred  to  the  Men-kamline  Purchases  account  in 
order  that  that  account  may  show  all  the  merchandise  for  the  month  from  which  the 
sales  were  made,  otherwise  the  correct  profit  on  the  merchandise  sold  could  not  be 
found  when  the  books  were  closed. 

The  following  is  the  entry  : 


Merchandise  Purchases  12.V.I5    50 

Merchandise  Inventory 
To  transfer  the  inventory  of  Feb.  1  to 
the  Merchandise  Purchases  account. 

After  posting  the  entry,  rule  the  Merchandise  Ini-entory  account. 

Balance  the  Cash  account. 

Take  a  trial  balance  of  your  ledger. 

Present  all  books  to  the  instructor  for  approval. 

1  Remember,  do  not  write  Accounts  Receivable  nor  Account*  Payable  in  your  ledger. 


80 


PRINCIPLES  OF  BOOKKEEPING 


Exercise  31.    Review 

For  Written  Work 
I     STATEMENTS 

Make  the  statements  from  the  following  trial  balances.    Date  each  state- 
ment March  31,  19 — . 

1. 


Cash 

Notes  Receivable 
James  A.  Hardin 
Martin  &  Son 
Mdse.  Inventory 
Notes  Payable 
Frederic  &  Co. 
Lyman  A.  Grant 
Student,  Prop. 
Mdse.  Sales 
Interest  Earned 
Mdse.  Purchases 
Salaries 
Interest  Paid 

Inventory,  March  31 : 
Merchandise 

Cash 

Henry  Johnson 

Henry  T.  James 

Mdse.  Inventory 

Office  Furniture 

Notes  Payable 

H.  H.  Weston 

H.  M.  Reed 

Morris  &  Son 

Geo.  S.  Masten,  Prop. 

Mdse.  Sales 

Interest  Earned 

Mdse.  Purchases 

Salary 

Interest  Paid 

Inventories,  March  31 : 

Merchandise 
Office  Furniture 


$661.75 
125. 
365. 
235.20 
920. 

$325. 
286.50 
67.40 
2450. 
1827.40 
13.75 
2554.75 
100. 


2. 


$4970.05    $4970.05 
|1926.50 

$1364.35 
238.20 
107.75 
1000. 
135. 

$411.45 
320.  - 
298.40 
205. 
2250. 
2400.60 
13.50 
2975.50 
50. 

28.15 

$5898.95    $5898.95 

$1826.50 
135. 


SET  II.    WHOLESALE  CARPET  BUSINESS 
II.    CLOSING  THE  LEDGER 


81 


Directions.    On  a  sheet  of  ledger  paper  copy  the  following  accounts, 
allowing  eight  lines  for  each  account : 

I 

Student,  PROPRIETOR 


19— 
Mar. 

1 

1 

2500 

MERCHANDISE  SALES 


19— 

Mar. 

9 

1 

582 

20 

1(3 

2 

359 

40 

2:5 

4 

157 

80 

29 

4 

108 

25 

INTEREST  EARNED 


19— 

Mar. 

17 

6 

10 

30 

24 

6 

5 

85 

MERCHANDISE  PURCHASES 


19— 

Mar. 

4 

1 

347 

65 

13 

2 

247 

80 

19 

2 

475 

10 

26 

3 

512 

OFFICE  SUPPLIES 


19— 

Mar. 

3 

3 

12 

45 

15 

4 

8 

75 

30 

5 

6 

40 

82 


PRINCIPLES  OF  BOOKKEEPING 
RENT  PAID 


Mar. 


45 


SALARIES 


INTEREST  PAID 


Inventories,  March  31  : 

Merchandise 
Office  Supplies 


19— 

Mar. 

15 

4 

37 

50 

31 

5 

37 

50 

19— 

Mar. 

12 

4 

7 

15 

22 

5 

8 

20 

$694.60 
15.40 


a.  Open  the  following  accounts :  Profit  and  Loss,  Merchandise  Inven- 
tory, and  Sundry  Expense  Inventory, 

b.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 


II 
MERCHANDISE  INVENTORY 


19— 

Apr. 

1 

1 

856 

40 

SET  II.    WHOLESALE  CA11PET   BUSINESS  83 

JAMES  H..CONAVAY,  PROPRIETOR 


19— 

Apr. 

1 

1 

a  150 

MERCHANDISE  SALES 


19— 

Apr. 

9 

3 

978 

45 

13 

4 

671 

50 

22 

4 

572 

00 

20 

5 

110 

25 

INTEREST  EARNED 


19— 

Apr. 

17 

4 

9 

GO 

25 

5 

16 

25 

MERCHANDISE  PURCHASES 


19— 

Apr. 

4 

3 

758 

30 

11 

4 

862 

55 

17 

5 

265 

75 

24 

5 

488 

30 

OFFICE  SUPPLIES 


19— 

» 

Apr. 

10 

3 

15 

35 

24 

5 

9 

85 

84 


PRINCIPLES  OF  BOOKKEEPING 
RENT  PAID 


19— 

Apr. 

3 

4 

42 

SALARIES 


19— 

Apr. 

15 

;; 

32 

50 

30 

I 

32 

50 

INTEREST  PAID 


19— 

Apr. 

12 

3 

10 

70 

15 

3 

8 

75 

23 

4 

3 

60 

Inventories,  April  30 : 

Merchandise 
Office  Supplies 


$1120.70 
9.50 


a.  Open  the  following  accounts :  Profit  and  Loss  and  Sundry  Expense 
Inventory. 

b.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 

III.   JOURNALIZING 

Journalize  orally  or  in  writing  each  of  the  following  transactions,  and 
state  the  reason  for  each  debit  and  each  credit  named. 

1.  You  began  business  by  investing  cash,  $1275;  merchandise,  $925; 
real  estate,  $1800. 

2.  Richard   J.   Dobbin    began    business   with    the   following  assets : 
merchandise,  $865 ;  cash,  $775 ;  account  against  Geo.  S.  Hanoly,  $235 : 
Leon  H.  Parker's  note,  $450  ;  real  estate,  $825. 

3.  Henry  L.  Thomas  gave  you  his  note  at  60  da.,  with  interest,  to 
apply  on  account,  $400. 


SET  II.    WHOLESALE  CAKPET  BUSINESS  85 

4.  You  gave  W.   H.  Acker  your  note  at  30  da.,   with   interest,  to 
apply  011  account,  $250. 

5.  Bought  merchandise  of  Gross  &  Co.  amounting  to  $720.    Gave 
them  cash  for  one  half  the  invoice  ;  balance!  on  account. 

6.  Sold  James  S.  Marble  merchandise  amounting  to  $550.    Received 
his  check  for  one  half  the  invoice;  balance  on  account. 

7.  Paid  your  note  in  favor  of  Markham  &  Co.  in  cash,  $325. 

8.  Received  a  check  from  Henry  A.  Nolan  for  his  note,  $100. 

9.  You  gave  Canton  &   Co.  cash  for  your  note  and   the   interest : 
face  of  the  note,  $245;  interest,  $4.90. 

10.  Received  a  check  from  J.  K.  Allis  for  his  note  and  the  interest: 
face  of  the  note,  $515;  interest,  $10.30. 

11.  You,  the  proprietor,  take    cash  from  the  business,  to   apply  on 
your  monthly  salary,  $60. 

12.  Borrowed  from  the  First  National  Bank  cash,  $200  ;  gave  them 
your  note  at  30  da. 

13.  Loaned  David  R.  Best  cash,  $160,  and  received  his  note  at  60  da. 

14.  Paid  Harding  &  Baker  cash,  for  the  interest  on  your  note,  $15. 

15.  Received  of  John  S.  Durkin  cash,  for  the  interest  on  his  note,  $20. 


CHAPTER   V 


ADDITIONAL   BOOKS  USED 

The  student  has  already  used  the  journal  and  the  cashbook  in  which 
entries  were  first  made,  and  then  postings  have  been  made  to  the  ledger. 
In  subsequent  sets  the  purchase  book  and  the  sales  book  are  to  be  used 
as  books  of  original  entry ;  that  is,  books  in  which  entries  are  first  made. 

Purchase  Book.  The  purchase  book  contains,  usually,  an  abstract  of 
all  bills  of  merchandise  bought.  At  regular  intervals  the  book  is 
footed,  ruled,  and  posted. 

The  script  purchase  book  is  illustrated  on  page  89. 

Sales  Book.  The  sales  book  contains  a  record  of  all  sales  on  account, 
and  usually  of  all  cash  sales,  except  small  retail  sales  for  which  no 
bills  are  rendered.  In  this  text  all  sales  are  entered  in  the  sales  book. 
The  records  consist  of  the  names  and  the  addresses  of  the  purchasers, 
the  terms,  the  items,  the  prices,  and  the  amounts  of  goods  sold.  At 
regular  intervals  the  book  is  footed,  ruled,  and  posted. 

The  script  sales  book  is  illustrated  on  pages  90  and  91. 

When  the  cashbook,  the  purchase  book,  and  the  sales  book  are  used, 
only  such  transactions  as  do  not  affect  these  books  are  entered  in 
the  journal. 

It  will  be  found  helpful,  as  a  preliminary  drill,  to  journalize  each 
purchase  or  each  sale  on  the  blackboard,  and  then  note  the  corresponding 
entry  in  the  purchase  book  or  the  sales  book. 

ILLUSTRATION.  All  the  entries  in  the  purchase  book  might  be  written  as  a  com- 
pound journal  entry,  as  follows : 


Mdse.  Purchases 
John  Adams 
TVm.  A.  Smith 
D.  S.  Jones 
Asa  M.  Martin 


600 


120 
180 
200 
100 


ILLUSTRATION.   All  entries  in  the  sales  book  might  be  written  as  a  compound 
journal  entry,  as  follows  : 


R.  H.  Downey 
Leon  J.  King 
Benj.  L.  Ransom 
*  Mdse.  Sales 


150 
125 

75 


350 


86 


ADDITIONAL  BOOKS  USED  87 

The  receipts  and  the  payments  of  cash,  the  purchases,  and  the  sales 
constitute  the  leading  entries  and  records  in  bookkeeping,  and  the  keep- 
ing of  separate  books  for  each  results  in  these  advantages : 

1.  Information  is  more  readily  obtained  if  the  cash,  the  purchases, 
and  the  sales  are  each  grouped  in  separate  books. 

2.  The  balance  of  cash  may  be  readily  found  at  any  time. 

3.  The   individual   and  collective  purchases  may  be  referred  to  at 
once,  for  all  the  purchases  are  in  one  book. 

4.  The  individual  and  collective  sales  may  be  referred  to  at  once, 
for  all  the  sales  are  in  one  book. 

5.  Much  time  is  saved  in  posting,  as  the  totals  of  cash,  of  purchases, 
and  of  sales  are  posted  to  the  ledger. 

SET  E.    FLOUR  AXD  GRAIX 
MODEL  SET 

On  pages  89-93  is  a  model  set  in  script,  in  which  the  journal,  the 
cashbook,  the  purchase  book,  and  the  sales  book  have  been  used,  and 
posted  to  the  ledger.  This  set  was  written  from  the  following  Memoranda 
of  Transactions,  but  different  prices  were  used  in  some  instances. 

Opening  the  Set.  Write  the  set  from  the  Memoranda  of  Transactions 
following.  If  necessary,  be  guided  by  reference  to  the  mochl  script  set. 

1.  Use  a  double  sheet  of  journal  paper  (four  pages)  and  a  sheet  of 
ledger  paper  (two  pages). 

2.  On   the   upper   half    of  page   1    of  the   journal    sheet    write   the 
journal,  and  on  the  lower  half,  the  purchase  book :  on  pages  2  and  3. 
the  cashbook;   on  page   4,   the   sales   book.     On   the   unused   portion    of 
page  3  write  the  trial,  balance. 

3.  This  set  is  not  to  be  recorded  in  the  bound  blank  books. 

4.  The  entries  will  be  the  same  as  in  the  script  models,  but   the 
amounts  will  differ  in  some  of  the  transactions. 

5.  A.  B.  Coates  is  represented  as  the  proprietor. 

MEMORANDA  OF  TRANSACTIONS 

March  1.  A.  B.  Coates,  728  Market  St.,  Chicago,  111.,  began  the  Graia. 
"and  Produce  business,  investing  cash,  SloOO. 

Make  a  memorandum  in  tla.e  journal,  but  the  entry  for  the  cash  invested  is  to  be 
made  in  the  cashbook. 

1.  Paid  H.  C.  Inman  cash,  for  rent  of  the  store  for  March,  §75. 
1.  Paid  Resor  &  Co.  cash,  for  office  books  and  supplies,  812.50. 


88  PRINCIPLES  OF  BOOKKEEPING 

March  2.  Bought  of  Rowen  &  Co.,  Minneapolis,  on  account,  30  da. : 
400  bbl.  Flour  at  §5.20 

3.  Bought  of  Wesley  &  Son,  City,  for  cash : 

600  bu.  Wheat  at  81 

4.  Bought  of  Rising  &  Co.,  for  cash,  4  T.  coal,  for  heating  the  store, 
at  $6.40. 

5.  Sold  E.  M.  Ferris,  Buffalo,  on  account,  20  da. : 

150  bbl.  Flour  at  $6.50  150  bu.  Wheat  at  $1.25 

9.  Bought  of  Rowen  &  Co.,  Minneapolis,  on  account,  30  da. : 

800  bu.  Oats  at  48  <k 

10.  Sold  Jas.  R.  Mahoney,  City,  on  account,  20  da. : 

100  bu.  Wheat  at  $1.25 

11.  Sold  E.  D.  Messer,  City,  for  cash: 

50  bbl  Flour  at  $6.50  200  bu.  Oats  at  600 

15.  Sold  E.  M.  Ferris,  Buffalo,  on  account,  20  da. : 

300  bu.  Oats  at  600  150  bu.  Wheat  at  $1.25 

20.  Sold  A.  W.  Carson,  City,  for  cash: 

100  bbl.  Flour  at  $6.50  150  bu.  Oats  at  600 

23.  Bought  of  A.  A.  Dunton,  City,  on  account,  3  da. : 
500  bu.  Wheat  at  $1 

25.  Received  of  E.  M.  Ferris  his  check  in  full  for  the  invoice  of 
March  5. 

A  check  is  treated  as  cash ;  record  the  amount  under  Cash  Received. 

26.  Paid  A.  A.  Dunton  cash  in  full  for  the  invoice  of  March  23. 

27.  Sent  Rowen  &  Co.  a  note  at  20  da.,  with  interest,  in  full  for 
the  invoice  of  March  2. 

30.  Received  of  Jas.  R.  Mahoney  cash  in  full  for  the  invoice   of 
March  10. 

31.  Paid  the  bookkeeper,  C.  K.  Price,  his  monthly  salary  in  cash,  $50. 
31.  The  Proprietor  takes  from  the  business  cash,  for  his  monthly 

salary,  $150. 

Closing  the  Set.    Proceed  to  close  the  books,  as  follows: 

1.  Balance  the  cashbook ;  follow  the  model  script  form. 

2.  Make  the  closing  entry  and  rulings  in  the  purchase  book. 

3.  Make  the  closing  entry  and  rulings  in  the  sales  book. 


ADDITIONAL  BOOKS   USED 


89 


SET    E.     .JUUKXAL 


cAamcs  ancZ  «_x4Jciresses 


CTerms 


^Totals 


22 


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a. 


SET    E.     PURCHASE    BOOK 


90 


PRINCIPLES  OF  BOOKKEEPING 


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72. 


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SET    E.     SALES    BOOK 


ADDITIONAL  BOOKS   USED 

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91 


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2-0    /     ~ 


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SET  E.  SALES  BOOK  (CONTINUED),  AND  TRIAL  BALANCE 


92 


PRINCIPLES  OF  BOOKKEEPING 


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SET   K.   .  LEDGER 


ADDITIONAL    HOOKS   USED 


93 


SET    E.     LEDGEK    (CONTINUED) 

4.  Post  all  books  to  the  ledger ;  allow  five  lines  for  each  account. 

a.  Post  from  the  journal  in  the  usual  way,  writing  -7.  in  the  explana- 
tory column  of  the  ledger. 

b.  Post  from  the  cashbook ;    write   C.  B.  in  the  explanatory  column 
of  the  ledger.    Remember  to  post  the  footings  of  the   cashbook. 

c.  Post  from  the  purchase  book.    Credit  each  personal  account,  and 
debit  Merchandise  Purchases  for  the  total  purchases.    Write  P.  B.  in  the 
explanatory  column  of  the  ledger.    Write  the  ledger  page  in  the  folio 
column  of  the  purchase  book. 

d.  Post  from  the  sales  book.    Debit  each  personal  account,  and  credit 
Merchandise  Sales  for  the  total  sales.  Write  8.B.  in  the  explanatory  column 
of  the  ledger.  Write  the  ledger  page  in  the  folio  column  of  the  sales  book. 

5.  Recheck  the  posting  ;  foot  the  ledger  accounts. 

6.  Take  a  trial  balance  and  have  it  approved  by  the  instructor. 

7.  Pass  all  work  to  the  instructor. 

NOTE.    If  additional  work  is  required,  use  Set  C,  page  26. 


94  PRINCIPLES  OF  BOOKKEEPING 

SET  F.    COAL  AND  WOOD 

Opening  the  Set.  This  set  is  designed  to  give  further  drill  in  the 
use  of  the  cashbook,  the  purchase  book,  the  sales  book,  the  journal, 
and  the  ledger. 

1.  Use  sheets  of  journal  paper  and  ledger  paper. 

2.  This  set  is  not  to  be  recorded  in  the  bound  blank  books. 

3.  Follow  the  directions  given  in  the  model  script  set. 

4.  Student  is  represented  as  the  proprietor. 

MEMORANDA  OF  TRANSACTIONS 

April  1.  Student  begins  a  Coal  and  Wood  business,  investing  cash, 
$1750. 

2.  Rent  a  coal  and  wood  depot  of  C.  M.  Estes,  17  Warren  St.; 
give  him  a  check  for  the  month  of  April,   $75. 

3.  Buy   of  M.  L.  Travers,   for   cash,   2  work   horses,   |130   each; 
1  delivery  wagon,  $100 ;  1  set  double  harness,  $35. 

Debit  Delivery  Equipment  for  the  total  of  the  above  bill. 

4.  Buy  of  C.  F.  Osborn  &  Co.,  City,  on  account,  10  da. : 

100  T.  Egg  Coal  at  $6  100  T.  Grate  Coal  at  $6.10 

4.  Buy  of  Stevens  &  Co.,  Pittsburgh,  on  account,  10  da. : 

100  T.  Stove  Coal  at  $6.25  100  T.  Nut  Coal  at, $6.20 

100  T.  West  Virginia  Coke  at  $5 

8.  Buy  of  C.  L.  Smith,  City,  for  cash: 

10  cd.  Maple  Wood  at  $3.50  10  cd.  Pine  Wood  at  $4.50 

10  cd.  Body  Hickory  Wood  at  $5.50 

9.  Sell  George  H.  Marshall,  Homeville,  on  account: 

50  T.  Stove  Coal  at  $7.50  50  T.  Grate  Coal  at  $7.25 

11.  Sell  Gaylord  &  Son,  City  Point,  on  account: 

50  T.  West  Virginia  Coke  at  $6  50  T.  Nut  Coal  at  $7.50 

12.  Sell  G.  A.  Collier,  City,  for  cash : 

50  T.  Stove  Coal  at  $7.50  10  cd.  Maple  Wood  at  $4.50 

10  cd.  Body  Hickory  Wood  at  $6.50 

15.  Pay  C.  F.  Osborn  &  Co.  cash,  to  apply  on  account,  $500. 

16.  Receive  of  Gaylord  &  Son  cash,  to  apply  on  account,  $250. 

17.  Give  Stevens  &  Co.  a  note  at  30  da.,  with  interest,  to  apply  on 
account,  $1000. 


ADDITIONAL  BOOKS    I'SED  95 

April  20.  Receive  of  (jay lord  &  Son  their  check  to  balance  account, 
$425. 

25.  Receive  of  George  H.  Marshall  cash,  to  apply  on  account,  $350. 
27.  Sell  G.  A.  Collier,  City,  for  cash : 

10  cd.  Pine  Wood  at  $5.50  50  T.  (irate  Coal  at  $7.25 

29.  Pay  Mary   L.   Pierce,   the   bookkeeper,   her    monthly   salary   in 
cash,  $30 ;  pay  James  Torrey,  the  teamster,  his  monthly  salary,  $30 ; 
pay  E.  L.  Higgins,  for  care  of  the  horses,  $16.50. 

30.  Make  an  additional  investment  in  cash,  §750. 

Inventories,  April  30,  19 — 
Merchandise : 

50  T.  Nut  Coal  at  $6.50 
100  T.  Egg  Coal  at  $6 
50  T.  West  Virginia  Coke  at  84.75 

Delivery  Equipment : 

Horses,  Wagon,  and  Harness  at  cost,  §395 

Closing  the  Set.    Close  all  the  books. 

Post  to  the  ledger;  allow  eight  lines  for  each  account. 

Remember  to  open  the  ledger  accounts  in  the  proper  order. 

Take  a  trial  balance ;  make  the  statements  :  close  the  ledger. 
Pass  all  work  to  the  instructor  for  approval. 


CHAPTER  VI 

INTRODUCTION  TO  BUSINESS  PRACTICE 
THE  BANK  ACCOUNT 

Bank.  A  bank,  primarily,  is  an  institution  chartered  by  the  state 
or  the  national  government,  to  deal  in  credits  and  to  provide  for  the 
safe-keeping  of  money. 

Commercial  Bank.  A  commercial  bank  renders  important  and  diver- 
sified services  to  business  men,  among  which  are  the  following- 

1.  It   grants   credit  to 
business   men    who    wish 
to  borrow  money. 

2.  It  is  a  safe  place  to 
keep     money,    securities, 


AUTHORIZED  SIGNATURE  OF 


For  the  HAMPDEN  NATJONAL  BANK  of  Westfield,  Mass. 


Address 


Business 


Date 


and  valuables. 

3.  It  facilitates  the  pay- 
ment of  money  by  allow- 
ing deposits  to  be  drawn 
out  on  an  order  called  a 
check.  It  does  away  with 
the  necessity  of  sending 
money  from  one  place  to 
A  SIGNATURE  CARD  another. 

±.  It  is  especially  help- 
ful to  business  men  in  making  collections,  as  notes,  checks,  and  drafts. 
5.  The  modern  bank  is  very  often  called  upon  to  give  counsel  to 
its  patrons  regarding  the  advisability  of  making  investments.    Banks 
are  able  to  give  expert  advice  along  these  lines. 

Opening  an  Account.  A  person  opens  an  account  with  a  commercial 
bank  by  being  identified  if  he  is  not  known  to  the  bank.  After  iden- 
tification he  writes  his  name  in  a  signature  book  or  on  a  signature  card. 
He  then  makes  out  a  deposit  ticket  for  all  items  deposited,  as  cash, 
checks,  etc.  The  bank  furnishes  deposit  tickets  and  a  check  book 
(a  book  of  blank  checks  and  stubs),  without  charge. 

The  illustration  above  shows  a  signature  card  properly  filled  out  by 
a  depositor  when  he  opens  an  account  with  a  bank. 

96 


INTRODUCTION  TO   BUSINESS  PRACTICE 


97 


THE  UNION  BANK 

DEPOSITED  BY 


Please  list  each  check  separately 


Bills^ 
Gold 


The  signature  card  gives  such  information  as  the  hank  may  require  concerning 
the  depositor,  but  the  most  important  is  the  depositor's  signature.  Any  paper 
presented  at  the  hank  bearing  the  depositor's  name  admits  of  identification  by 
reference  to  the  signature  card. 

A  plain,  neat  signature  is  most  difficult  to  imitate,  (hie  x/tould  altrays  write  hia 
name  in  exactly  the  same  for/it. 

Deposits.  Deposit  tickets  are  not  uniform  in  arrangement.  The  fol- 
lowing illustration  shows  how  the  items  of  a  deposit  may  be  classified 
for  the  convenience  of  the  bank  which  receives  them.  The  listing  of 
each  check  separately  on  the  ticket  is  of  special  importance  to  the  bank. 

These  tickets  are  commonly 
made  up  on  an  adding  machine ; 
a  duplicate  copy  may  be  made  for 
the  file  of  the  depositor.  The  file 
of  these  duplicates  is  valuable  for 
reference. 

The  deposit  ticket  and  the  items 
for  deposit  should  be  handed  to 
the  receiving  teller,  the  official  who 
generally  receives  all  money  and 
all  deposits  passed  to  the  bank.  He 
examines  the  deposit,  and  if  every- 
thing is  found  to  be  correct,  he  en- 
ters it  in  a  book  called  a  pass  book. 

The  pass  book  is  returned  to  the 
depositor  by  the  teller  and  serves 
as  a  receipt  for  the  money  deposited 
in  the  bank ;  it  should  always  ac- 
company a  deposit.  Under  no  cir- 
cumstances should  the  depositor 
make  an  entry  in  his  pass  book*. 

On  this  deposit  ticket,  in  addition  to  the  currency  items,  each  check 
is  listed  by  giving  the  name  of  the  bank  or  of  the  city  on  which  it  is 
drawn,  for  the  convenience  of  the  bank  which  receives  the  deposit. 

Check  Record.  On  page  98  is  given  a  form  for  keeping  a  record  of 
the  deposits  and  the  checks  in  the  check  book  in  these  sets.  In  the 
check  book  are  blank  pages  for  the  keeping  of  this  record. 

Each  deposit  is  entered  when  made,  and  each  check  when  drawn  ; 
the  balance  may  be  extended  daily,  or  as  often  as  the  cash  is  proved. 
By  writing  the  balance  directly  opposite  and  to  the  right  of  the  last 
check,  the  date  of  the  check  indicates  the  date  of  the  balance. 


Silver_ 


Checks^S 


A    DEPOSIT    TICKET 


98 


PRINCIPLES  OF  BOOKKEEPING 


DEPOSITS 

CHECKS 

Date 

Amount 

Date 

Ck.Xo. 

Amount 

Balance 

Mar. 

4 

2000 

Mar. 

9 

1 

200 

16 

200 

12 

2 

75 

1725 

31 

596 

70 

17 

3 

112 

50 

23 

1 

500 

1312 

50 

31 

5 

30 

1879 

20 

Checks.  When  the  depositor  wishes  to  withdraw  money  from  the 
bank,  he  writes  an  order  called  a  check.  A  check  book  is  a  book  of 
blank  checks  furnished  to  the  depositor  by  the  bank.  It  consists 
usually  of  two  parts,  the  stubs  and  the  checks.  The  stub  contains  a 
memorandum  of  the  check  and  is  valuable  for  reference  after  the  check 
has  been  detached,  and  for  comparison  when  the  check  is  returned 
canceled. 

The  illustration  on  page  99  shows  one  page  of  a  check  book,  both 
the  checks  and  the  stubs  having  been  filled  out. 

The  proof  of  cash  is  necessary  at  stated  times,  and  in  proving  cash  the  check 
book  must  be  depended  on  to  show  the  condition  of  the  bank  account.  By  keeping 
a  total  of  the  checks  drawn  and  a  total  of  the  deposits  made,  the  balance  shown  by 
the  check  book  may  be  readily  ascertained  at  any  time. 

Page  99  is  an  illustration  of  a  common  form  of  check  book.  It  shows  the 
transactions  of  a  depositor,  Charles  II.  Jones,  with  The  Union  Bank  for  two 
consecutive  days. 

Notice  the  manner  of  filling  out  the  check ;  the  important  items  of  the  check  are 
reproduced  on  the  stub. 

Great  care  should  be  taken  in  the  writing  of  each  check.  There  should  be  no  erasures 
of  any  kind  in  the  check  book. 

The  first  figure  in  the  amount  of  a  check  should  be  written  close  to  the  dollar 
sign;  an  amount  in  figures  should  be  written  as  follows:  $15—.  The  first  word  in 
writing  the  amount  should  begin  at  the  head  of  the  line,  and  cents  should  be  ex- 
pressed as  a  fraction  of  a  dollar,  as  T2^j-;  ahy  other  space  on  this  line  should  be 
filled  in  with  a  waved  or  broken  line. 

It  should  be  borne  in  mind  that  there  are  manifold  ways  of  keeping  a  check  book. 
The  method  outlined  herewith  is  a  simple  one  and  well  serves  the  need  of  the  student 
in  his  work  in  business  practice. 

The  left,  or  reverse,  stub  may  be  used  for  recording  any  memoranda 
that  the  depositor  deems  important. 

Pass-Book  Entries.  Deposits  should  be  entered  in  the  pass  book  by 
the  teller  of  the  bank  at  the  time  the  deposit  is  made.  If  at  any  time 
a  deposit  is  made  without  the  pass  book,  a  duplicate  deposit  ticket- 
should  be  obtained  by  the  depositor. 


INTRODUCTION  TO  BUSINESS  PRACTICE 


99 


* 


xs  2 


9 


\ 


•s        C 

s     .2 

"S 

to  fr"**^^ 

ION 


s 


"S 

o 


ON 


N 


a 


vs 


a 


\ 


100 


PRINCIPLES  OF  BOOKKEEPING 


Different  banks  use  dif- 
ferent methods  for  keep- 
ing records  in  a  pass  book. 
All  deposits  may  be  en- 
tered in  it;  at  the  end 
of  the  month  the  checks 
are  totaled  on  an  adding 
machine,  the  amount  car- 
ried to  the  pass  book,  and 
the  balance  shown. 

However,  it  is  more 
common,  at  least  in  large 
banks,  to  record  deposits 
in  a  pass  book,  and  at  the 
end  of  each  month  all 
deposits  and  all  checks, 
itemized  or  in  total,  are 
entered  on  a  slip  or  on  an 
envelope,  and  the  balance 
shown  as  a  monthly  state- 
ment. This  statement,  to- 
gether with  all  canceled 
checks,  is  given  to  the 
depositor  and  constitutes 
a  statement  of  his  dealings 
with  the  bank  for  a  given 
month. 

In  this  text,  in  business 
practice,  all  deposits  will 
be  entered  in  the  pass  book 
at  the  time  they  are  made. 

Monthly    Bank    State- 

MONTHLY   BANK   STATEMENT    BLANK  T        .,  ,  » 

ments.  In  the  package  of 

business  forms,  a  sheet  is  provided  for  each  month  on  which  a  monthly 
statement  of  the  bank  account  should  be  made. 

In  the  box  of  business  forms  is  an  envelope  on  which  is  printed  : 


STATEMENT 

(Student's'name)                          jn  account  with 

For  the  month  o 

^he  UNION  BANK, 
f                         19 

Day 

Checks 

Deposits 

Balance 

Bal 

nee  brought  forward 

Total  Deposits 
for  Month 

Total  Credits 

Total  Checks 

Balance 

UNION  BANK 
Statement  for  the  month  of- 


.  Student 


INTRODUCTION  TO  BUSINESS  PKACTICE  101 

In  this  envelope  when  it  is  returned  to  the  student  will  be  found 
the  sheet  containing  a  record  of  the  deposits  and  the  checks,  and 
the  bank  balance  for  the  month  named.  The  canceled  checks  are  also 
included  in  this  envelope. 

The  deposits  in  the  pass  book  may  be  totaled  and  the  checks,  in  total, 
subtracted  therefrom,  thus  showing  the  balance  in  the  pass  book. 

Exercise  32.   Transactions  with  a  Bank 

For  Written  Work 

Directions.  Make  the  following  blank  forms :  rule  lengthwise  two 
sheets  of  paper  about  5x8  inches  ;  rule  on  each  of  these  sheets  two 
checks  and  two  stubs,  representing  a  page  of  a  check  book.  Follow 
the  model  on  page  99. 

On  another  sheet  of  paper  rule  a  form  like  the  one  given  on  page  98, 
—  the  form  for  keeping  the  record  of  deposits  and  checks,  and  the 
balance.  On  this  sheet  keep  a  record  of  the  following  deposits  and 
checks.  Enter  the  balance,  in  the  Balance  column,  after  writing  each 
second  check. 

1.  Under  date  of  March  1,  enter  a  deposit  of  81500. 

2.  Under  date  of    March  9,  write    a  check   for   8250,   in    favor   of 
Henry  S.  Lee,  No.  1. 

Fill  out  the  stub  first  and  then  write  the  check. 

If  one  first  writes  the  check,  he  is  quite  likely  to  omit  the  filling  out  of  the  stub, 
and  the  stub  is  the  only  record  of  the  check,  in  detail,  after  it  has  been  detached 
by  the  maker. 

3.  Under  date  of  March  13,  enter  a  deposit  of  §150. 

4.  Under  date  of  March  16,  write  a  check  for  $187.50,  in  favor  of 
Wm.  G.  Howe,  No.  2. 

Remember  to  fill  out  the  stub  first. 

5.  Under  date  of  March  19,  write  a  check  for  $100,  in  favor  of 
E.  T.  Perry. 

6.  Under  date  of  March  23,  enter  a  deposit  of  §75. 

7.  Under  date   of  March   30,  write   a  check   for   $28.40,   in   favor 
of  Amos  H.  Wells. 

8.  Under  date  of  March  31,  enter  a  deposit  of  $120. 

9.  Under  date  of  March  31,  write  a  check   for   850,   in   favor   of 
John  D.  Rockwell. 

10.  What  balance  now  remains  in  the  bank  ? 

SUGGESTION.    This  exercise  may  be  continued  at  the  discretion  of  the  instructor. 


102  PRINCIPLES  OF  BOOKKEEPING 

BUSINESS  FORMS 
The  Receipt.    Study  every  detail  of  the  following  model  receipt : 


Deceived  o 


Zoo 


7<*~ 


-&& 


>£2X? 


The  Invoice.    The  following  model  shows  how  an  invoice  should  be 
made  out.   The  terms  are  on  account,  60  da.,  therefore  it  is  not  receipted. 


In  this  invoice  who  is  the  buyer  ?  the  seller  ?    What  is  meant  by  terms  60  da.  ? 
*  Note  that  the  dollar  sign  is  not  used  in  writing  either  the  prices  or  the  extensions. 

Filing  Invoices.    For  convenience  in  handling,  invoices  may  be  folded 
lengthwise  with  the  printed  matter  outward. 


INTRODUCTION  TO  BUSINESS  PRACTICE  103 

The  manner  of  folding  the  invoice  is  not  imperative.  The  invoice 
may  be  folded  lengthwise,  the  printed  matter  within  ;  on  the  left  end 
write  the  name  of  the  seller,  the  amount  in.  figures,  and  the  date. 

After  the  invoices  are  folded  a  rubber  band  may  be  placed  around 
them,  and  then  they  are  in  a  convenient  form  for  handling.  The  filing 
should  be  in  the  order  of  the  dates. 

These  suggestions  are  simply  for  the  students  in  the  classroom. 

The  Promissory  Note.    Study  all  the  details  of  this  model  note : 


I 
after  date^-^Lpromise  to  pay  to 


aL 

Value  received 


Promissory  notes  are  of  two  kinds  :  notes  that  we  give,  Notes  Payable  ; 
notes  that  we  receive,  Notes  Receivable.     They  are  always  in  writing,  — 
a  written  promise  to  pay  money.     They  are  usually  given  or  received 
on  account,  or  when  money  is  borrowed  or  loaned. 

The  giving  or  the  receiving  of  a  note,   for   a   personal   account,  is 
merely  the  substitution  of  a  written  promise  for  an  oral  promise. 

The  holder  of  a  note  may  sell  it  to  a  bank,  and  thus  secure  cash  to 
use  in  his  business. 

If   a  note  is   sold   before   maturity,  a  reduction,   called  discount,   is 
usually  made. 

If  a  note  is  to  bear  interest,  it  must  be  so  stated  in  the  note. 

Exercise  33.    Business  Forms 

for  Written  Work 

I.  RECEIPTS 
Write  the  folloiving  receipts  on  slips  of  paper  properly  ruled : 

1.  S.  T.  Wade  owes  you  $56.75,  and  pays  the  whole  amount. 
The  receipt  bears  these  words:   in  full  of  account. 

2.  R.  O.  Warner  owes  you  f  120. 50,  and  pays  you  $75. 
The  receipt  bears  these  words  :  to  apply  on  account. 


104 


PKINCIPLES  OF  BOOKKEEPING 


3.  You  owe  John  Wheeler  $102.50,  and  pay  it  all. 

4.  You  owe  J.  H.  Leaman  $62.50,  and  pay  him  $35. 

5.  You   pay  J.  K.  Lamson,   in   full,  the  account   at  the  bottom  of 

page  23. 

II    INVOICES 

Rule  two  sheets  of  paper  according  to  the  model,  and  write  the  following 


invoices : 


1.  Set  I,  page  60,  under  the  dates  of  Jan.  4  and  6. 

2.  Set  II,  page  76,  under  the  dates  of  Feb.  6  and  9. 

Ill     PROMISSOKY  NOTES 
Write  the  following  notes  on  slips  of  paper,  using  the  current  date : 

1.  Gave  Henry  A.  Morton  your  note,  at  60  da.,  with  interest,  payable 
at  the  First  National  Bank,  $250. 

2.  Received  of  Henry  S.  Mercer  his  note,  at  30  da.,  payable  at  The 
Union  Bank,  $128.50. 

3.  Gave  Wilson  &  Brown  your  note,  at  2  mo.,  payable  at  your  office, 
$175.20. 

4.  Received  of  A.  D.  Rose  &  Son  their  note,  at  1  mo.,  with  interest, 
payable  at  their  office,  $200. 


DAILY  CASH  PROOF 


Date 


Daily  Cash  Proof.  In  the  follow- 
ing sets  the  student  will  use  repre- 
sentative money  in  carrying  out  his 
business  transactions.  At  the  close 
of  each  day's  business  cash  should 
be  proved. 

How  to  prove  cash: 

1.  The  left  side  of  the  cashbook 
shows  all  cash  received. 

2.  The  right  side  of  the  cashbook 
.shows  all  cash  paid  out. 

3.  The    difference    shows    the 
amount  of  cash  the  business  has 
on  hand. 

MODEL   FOR    DAZLY    CASH   PROOF  4«     The  8Um  °f  ™™*J  m  the  CaSh 

drawer  added   to  the  amount   on 

deposit  in  the  bank  should  equal  the  difference  shown  by  the  cashbook. 
5.  If  no  bank  account  is  kept,  the  cash  in  the  drawer  should  equal 
the  difference  shown  by  the  cashbook. 


Cash  received  per  cashbook,  total  <5~7  (>  O 
Cash  paid  per  cashbook,  total       /J*  O  ff.~ 
Balance  per  cashbook 


Cash  on  hand  per  cash  drawer 
Cash  in  bank  per  check  book  _ 
Total 


INTRODUCTION  TO  BUSINESS  PRACTICE  105 

6.  If  all  money  is  in  the  bank,  the  true  bank  balance  should  equal 
the  balance  shown  by  the  cashbook  less  any  checks  that  may  be 
outstanding. 

It  is  suggested  that  the  form  of  proof  shown  in  the  illustration  on 
page  104  be  used. 

To  find  Errors  in  the  Trial  Balance.  If  the  debit  and  the  credit  items 
are  not  equal  (that  is,  do  not  balance),  observe  the  following  suggestions 
in  tracing  the  error: 

1.  Go  over  all  additions,  both  in  the  trial  balance  and  in  the  ledger. 

2.  Find  the  exact  amount  of  the  error ;  if  ten  or  some  power  of  ten, 
the  error  is  usually  in  addition. 

3.  If  the  amount  of  the  error  is  exactly  the  same  as  some  amount  in 
a  book  of  original  entry,  the  error  is  likely  to  be  with  that  amount. 

4.  Divide  the  amount  of  the  error  in  the   trial   balance   by  2,  and 
look  for  an  amount  corresponding  to  this  result.    If  a  debit  item  has 
been  posted  to  the   credit,   it  will  cause   an  error  equal  to  twice  the 
amount  of  the  item  thus  posted. 

5.  If  the  amount  of  the  error  is  divisible  by  9,  the  error  is  probably 
the  result  of  the  transposition  of  figures. 

6.  If  necessary,  recheck  the  posting  to  determine  if  that  work  was 
done  correctly.     (This  manner  of  rechecking  is  described  on  page  23.) 
Rechecking  involves  a  great  deal  of  extra  work ;   it  should  be  under- 
taken only  as  a  last  expedient. 

A  trial  balance  that  balances  is  not  absolute  proof  that  the  ledger  is  correct.  If 
a  credit  of  Notes  Receivable  were  posted  to  the  credit  of  Cttxh,  it  would  not  affect 
the  trial  balance. 


CHAPTER  VII 


SET  HI.    GRAIN  AND  SEED  BUSINESS 
PRELIMINARY  EXPLANATIONS 

The  object  of  this  set  is  to  give  systematic  drill  in  elementary 
business  practice.  Student  is  represented  as  the  proprietor.  Business 
forms  are  used,  and  all  transactions  in  cash  admit  the  handling  of 
currency.  An  account  is  kept  with  the  bank ;  deposits  are  made  and 
checks  are  drawn.  This  set  covers  a  period  of  two  months,  March  and 
April,  the  books  being  closed  at  the  end  of  each  month. 

The  books  used  in  this  set  are  the  journal,  the  cashbook,  the  sales 
book,  the  purchase  book,  the  statement  book,  and  the  ledger. 

All  business  forms  handled  are  either  incoming  papers  or  outgoing 
papers.  Incoming  papers  are  those  received  from  others ;  outgoing 
papers  are  those  given  to  others.  Incoming  papers  will  be  received 
and  recorded  by  the  student  as  in  business,  and  he  will  issue  and 
record  all  outgoing  papers  as  in  business. 

Selling  Price  Lists.  Different  selling  price  lists  may  be  used  if  desired. 
Twenty-five  selling  price  lists  are  provided  for  tlu's  set  (see  below). 
When  the  instructor  gives  the  student  the  necessary  blank  forms,  he 
should  assign  him  a  price  list.  Any  one  of  the  selling  price  lists  may  be 
used  in  connection  with  the  buying  price  list.  In  the  box  of  business 
forms  a  card  containing  the  selling  price  lists  may  be  found. 

SELLING  PRICE  LISTS 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

Barley  .... 

1. 

1.05 

1.08 

1.10 

1.04 

1.02 

1.07 

1.09 

1.10 

1.12 

1.08 

Clover  Seed  .     . 

8.80 

9. 

8.75 

8.80 

8.90 

8.95 

9.02 

9.10 

9.05 

8.85 

8.95 

Dwarf  Beans 

8. 

8.25 

8.10 

8.20 

8.05 

8.30 

8.35 

8.40 

8.45 

8.10 

8.13 

Field  Corn     .     . 

.75 

.74 

.76 

.80 

.84 

.79 

.81 

.83 

.82 

.80 

.78 

Garden  Corn 

3.80 

3.85 

3.00 

3.95 

3.75 

3.82 

3.86 

3.98 

4. 

3.82 

3.92 

Oats      .... 

.58 

.60 

.59 

.61 

.63 

.62 

.65 

.66 

.60 

.57 

.64 

Rve. 

1  30 

140 

1  35 

1  98 

1  31 

1  33 

1  34 

1  40 

1  37 

1  26 

1  33 

Timothy  Seed    . 

3.40 

3.45 

3.50 

3.35 

3.42 

3.47 

3.35 

3.38 

3.40 

3.36 

3.42 

Wheat.     .     .     . 

1.30 

1.28 

1.25 

1.32 

1.35 

1.27 

1.29 

1.33 

1.31 

1.26 

1.34 

106 


SET  III.    GRAIN  AND  SEED  BUSINESS 


107 


Buying  Price  List.     In  Set  III  all  merchandise  is  to  be  bought  at 
the  following  prices  per  bushel  : 


BUYING  PRICE  LIST 


Barley 

Clover  Seed 

Dwarf  Beans 

Field  Corn 

Garden  Corn 

750 

|6 

|6 

(!()(/; 

$3 

Oats 

Rye 

Timothy  Seed 

Wheat 

.       48<£ 

AI 

fl 

$2.50 

$1 

Blank   Business   Forms.     Ask   the    instructor    for   "Blank    Business 
Forms,  Box  No.  1,"  before  proceeding  to  write  Set  III. 


WORK  FOR  MARCH 

Incoming  Business  Forms  for  March.  These  incoming  forms  are 
included  in  the  text  for  the  following  reasons : 

1.  All  material  in  any  given  set  is  included  in  the  text  proper,  in 
order  that  the  textbook  may  be  complete  in  itself. 

2.  The  student  is  able  to  make  a  study  of  the  work  of  the  set  before 
attempting  to  write  it;  this  is  especially  important. 

8.  By  having  all  matter  included  in  the  text,  extended  and  varied 
reviews  are  made  possible. 

A  tablet,  separate  from  the  text,  containing  all  the  incoming  business 
forms  shown  in  the  list  on  the  following  page  is  available  for  use  with 
this  set  when  business  practice  is  used.1 


All  incoming  checks  are  drawn  on  Traders  National  Bank. 


1  See  under  Opening  the  Set,  para 


FOR  MARCH  AND  APRIL 


;e  100. 


12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

1.09 

1.05 

1.11 

1.10 

1.04 

1.08 

1.06 

1.09 

1.07 

1.10 

1.05 

1.09 

1.10 

l.(H 

8.98 

8.80 

9.05 

9.12 

8.93 

8.86 

8.85 

8.92 

8.91 

8.80 

8.88 

9.04 

8.79 

9. 

8.22 

8.21 

8.11 

8.24 

8.27 

8.32 

8.35 

8.25 

8.02 

8. 

8.15 

8.20 

8.25 

8.30 

.75 

.77 

.84 

.85 

.82 

.79 

.83 

.81 

.78 

.83 

.80 

.79 

.7-"> 
3.95 

.78 

3.95 

3.90 

3.88 

3.76 

3.85 

3.88 

4. 

3.95 

3.97 

3.80 

3.85 

3.90 

3.92 

.60 

.57 

.59 

.63 

.66 

.61 

.65 

.62 

.68 

.58 

.62 

.66 

.63 

.61 

1.32 

1.25 

1.29 

1.30 

1.38 

1.34 

1.30 

1.29 

1.28 

1.25 

1.30 

1.35 

1.2S 

1.32 

3.50 

3.45 

3.33 

3.37 

3.41 

3.44 

3.33 

3.39 

3.34 

3.35 

3.40 

3.45 

3.50 

3.52 

1.28 

1.30 

1.31 

1.32 

1.35 

1.27 

1.34 

1.33 

1.35 

1.25 

1.30 

1.32 

1.36 

1.29 

108  PRINCIPLES  OF  BOOKKEEPING 

If  business  practice  is  not  used,  the  tablet  of  incoming  forms  and  the 
box  of  blank  business  forms  will  not  be  needed. 

Form    1.    Invoice  of  E.  C.  Ferry,  City,  March  2.    Terms  :  cash. 

50  bu.  Clover  Seed  100  bu.  Field  Corn 

100  bu.  Oats 

Form    2.    Invoice  of  S.  D.  Welch,  City,  March  5.    Terms :  on  account. 

frf"*<Lp 

*  vr  C.^20  bu.  Dwarf  Beans  V^     7Co.-    40  bu.  Garden  Corn 


JS~   100  bu.  Barley  /V^          /XA.^   100  bu.  Wheat  /,££ 

— -t-jur*  /  ^o 

Form    3.    Eeceipt  of  Amos  Graves,  March  7,  in  your  favor,  for  rent  of  the 

store  for  March,  $35. 
Form    4.    Bill  of  David  Ross  for  office  books  and  stationery,  March  8. 

Office  Books,  $8.50  Stationery,  $4 

Form    5.    Invoice  of  Henry  Bruce,  City,  March  10.    Terms  :  on  account. 
££r;*  10° bu'  Rye  /£°  50  bu-  Timothy  Seed  *•** 

Form    6.    Bill  of  I.  N.  Moss,  City,  for  2  T.  coal  at  §5.20,  March  11.    Terms: 

cash. 
Form  7.  Bill  of  A.  C.  Webb,  City,  for  office  safe,  $75,  March  12.  Terms : 

cash. 
Form  8.  Invoice  of  Haynes  &  Co.,  City,  March  14.  Terms  :  on  account. 

/^°  '          *  *-30  bu.  Dwarf  Beans  /.       100  bu.  Rye 

•L  °,  200  bu.  Field  Corn  /         200  bu.  Wheat 

L  ff*^»  100  bu.  Barley  ?«— 

Form    9.    Check  of  Boyd  &  Co.,  City,  for  $200,  in  your  favor,  March  23. 
Form  10.    Invoice  of  S.  D.  Welch,  City,  March  24.    Terms :  on  account. 

(*<?•   10  bu.  Dwarf  Beans  fc^     7S*<    100  bu.  Barley     7*7 
.  fro ^100  bu.  Field  Corn    t,o,       #7$  100  bu.  Oats       JfTt 
20  bu.  Garden  Corn    &<) 

Form  11.    Invoice  of  Henry  Bruce,  City,  March  25.    Terms :  on  account. 
f .      100  bu.  Rye  /    200  bu.  Wheat 

Form  12.    Note  of  Jesse  Watson,  City,  for  $250,  in  your  favor,  at  30  da.,  with* 

interest,  March  29. 

Form  13.    Check  of  John  Wells,  City,  for  $100,  in  your  favor,  March  29. 
Form  14.    Check  of  Oscar  Wilson,  City,  for  $330.50,  in  your  favor,  March  31. 

Opening  the  Set.  This  set  may  be  written  in  any  of  the  following 
ways: 

1.  Simply  record  the  transactions  as  in  the  preceding  sets. 

Unless  otherwise  instructed,  keep  the  cashbook  on  a  sheet  of  journal  paper  and 
copy  at  the  close  of  the  month.  All  other  work  may  be  recorded  directly  in  the 
required  books. 


SET  III.    GRAIN  AND  SEED  BUSINESS  109 

/   2.   In  addition  to  recording  the  transactions,  all  business  forms  may 
"be  used. 

3.  In  addition  to  recording  the  transactions,  using  the  forms,  etc., 
all  the  business  called  for  may  be  done,  such  business  to  be  transacted 
according  to  the  directions  of  the  instructor. 

The  memoranda  and  all  directions  are  given,  so  that  complete  business  practice 
fa&y  be  used  if  desired. 

4.  If  the  tablet  of  incoming  business  forms  is  not  used,  make  out 
the  forms  on  page  108  and  file  them  in  the  envelope  for  incoming  papers 
before  beginning  Set  III,  and  use  them  instead  of  the  tablet. 

Prove  the  cash  at  the  close  of  each  day.   (See  model,  page  104.) 


MEMORANDA  OF  TRANSACTIONS  FOR  MARCH 

March  1.    Student  begins   the   Grain   and   Seed    business,    investing 
1240*0. 


Place  the  above  memorandum  in  the  journal,  but  make  >/o  journal  entry.  Make 
the  proper  entry  in  the  cashbook.  Receive  the  currency  from  the  instructor  and 
put  it  in  the  Business  Cash  envelope. 

_?.  You  have  entered  into  an  agreement  with  Amos  Graves  for  the 
rental  of  his  store,  120  Main  St.,  at  $35  per  month. 

iJtlV;"*;rY  is  required.    A  memorandum  of  this  agreement  may  be  made  and  filed 
the  incoming  papers. 


.Buy  of  E.  C.   Ferry,    City,    for    cash,    merchandise    as    per    the 
following  invoice,  Form  1. 


I'D* 


/  /oo 


£LGJL 


^ 


.^  o  o 


\\ 


110  PRINCIPLES  OF  BOOKKEEPING 

Remove  this  invoice  from  the  tablet  of  incoming  papers.  Xote  the  extensions 
and  the  addition. 

In  business  the  goods  received  are  compared  with  the  invoice,  and  if  found 
to  be  correct,  check  marks  are  placed  at  the  li-ft,  as  shown  iu  the  script  illustration 
on  page  109 ;  then  the  extensions  and  the  addition  are  verified  and  checked  as 
shown  at  the  right.  Verify  the-  extensions  and  the  addition. 

Make  the  proper  entries  in  the  cashbook  and  the  purchase  book. 

In  the  purchase  book,  write  the  name,  the  address,  the  terms,  and  the  amount 
on  one  line.  Pay  for  the  invoice. 

In  the  box  of  business  forms  there  is  a  filing  envelope  for  invoices  of  merchan- 
dise purchased.  Place  the  invoice  in  this  envelope. 

If  business  practice  is  not  used,  fold  the  invoice  once  lengthwise,  face  outward, 
and  place  it  in  the  Paid  Bills  envelope. 

March  3.  Sell  John  Williams,  City,  for  j^agh,  at  the  prices  given 
herewith : 

20  bu.  Clover  Seed  at  f  8  50  bu.  Field  Corn  at  75 £ 

40  bu.  Oats  at  600 

Make  out  an  invoice  and  receipt  it.  If  correct  in  every  detail,  record  it  in  the 
sales  book  and  the  cashbook.  Do  not  put  any  check  marks  on  any  bill  of  goods 
that  you  sell.  Receive  the  cash  and  place  it  in  the  Business  Cash  envelope. 

Pass  the  bill  to  the  office,  or  dispose  of  it  according  to  directions  received. 

Take  great  pains  in  counting  all  cash. 

4.  Deposit  in  The  Union  Bank  cash,  $1800. 

Read  pages  96-98  for  instructions. 

Make  out  a  deposit  ticket.    Record  the  amount  in  the  check  book. 

Place  the  currency  and  the  deposit  ticket  in  the  pass  book  and  hand  it  to  the  bank. 

5.  Buy  of  S.  D.  Welch,  City,  on  account,  merchandise  as  per  invoice, 
Form  l?^ 

Remove  the  invoice  from  the  tablet.    Check  the  extensions  and  the  footing. 
Record  it  in  the  purchase  book.    File  this  invoice  in  the  proper  envelope.    Do 
not  receipt  this  invoice.    Why? 

6.  Sell  John  Wells,  City,  on  account: 

5  bu.  Dwarf  Beans  20  bu.  Garden  Corn 

50  bu.  Barley 

AArrite  the  invoice,  but  do  not  receipt  it.  Why  ?  Use  the  selling  prices  of  the  list 
assigned  to  you.  Record  in  the  sales  book.  Refer  to  the  model,  page  90.  Dispose 
of  the  invoice  according  to  directions  received. 

7.  Pay  Amos  Graves  cash,  for  rent  of  the  store  for  March,  $35, 
Form  3. 

Remove  this  receipt.  Make  the  entry  in  the  cashbook.  Pay  the  money.  Place 
the  receipt  in  the  Paid  Bills  envelope. 


\1  SET  III.    GHAIN  AND  SEED  BUSINESS  111 

*? 

""  March  8.   Pay   David    Ross    cash,   for    ot'lice    books    and    stationery, 

$12.50,  Form  4. 

Examine  and  check  the  bill.    If  correct,  pay  it.    Make  the  entry  in  the  cashbook 
Fold  the  bill  and  file  it  in  the  Paid  Bills  envelope. 


. 

9.  Give  S.  D.  ^Wgjch  your  check,  to  apply  011  account,  $  200. 

Fill  out  the  stub   in  the   check  book,   Xo.  1.    (See   model    script   check   book, 
page  99.)    Write  the  check  and  detach  it.    Make  the  entry  in  the  cashbook. 

.  A  receipt  need  not  be  taken  when  an  amount  is  paid  by  check,  as  the  canceled 
check  will  be  returned  as  a  receipt.    However,  a  receipt  may  be  taken  if  desired. 

In  the  package  of  business  forms  there  is  a  sheet  for  keeping  a  record  of  your 
dealings  with  the  bank  for  one  month. 

If  the  checks  are  passed  to  an  office,  this  sheet  should  lie  left  at  the  office.  The 
form  and  the  use  of  this  sheet  are  illustrated  and  explained  on  page  100.  Place  the 
student's  name  on  the  sheet.  As  checks  are  received  they  may  be  recorded  thereon. 
\»If  the  checks  are  kept  by  the  student  at  his  desk,  he  may  keep  the  sheet  and 
do  this  work  himself.  At  the  end  of  the  month  the  sheet  and  the  checks  will  be 
-^placed  in  the  bank  envelope. 


.  Buy   of   Henry   Bruce,    City,    on    account,    merchandise   as   per 
invoice,  Form  5. 

Remove  this  invoice  from  the  tablet.   Examine  and  check  as  previously  instructed. 
ter  in  the  purchase  book.    File  the  invoice. 


.  Pay  the  bill  of  I.  N.  Moss  in  cash  for  2  T.  coal  at  $5.20,  Form  6. 
Remove  the  bill  from  the  tablet.    Examine  and  check  it.    If  correct,  pay  it. 

12.  Pay  the  bill  of  A.  C.  Webb,  by  check,  for  office  safe,  $75,  Form  7. 
Debit  Office  Furniture. 


3.  Receive  of  John  Wells  cash,  to  apply  on  account,  $100. 

Write  a  receipt  in  favor  of  John  Wells  and  receive  the  currency.    Make  the 
cashbook  entry.    Place  the  money  in  the  Business  Cash  envelope. 
\  \l 

^14.  ISuy  of   Haynes  &  Co.,   City,  on   account,    merchandise  as  per 
invoice,  Form  8. 

gamine  and  check  the  invoice,  and  then  proceed  as  usual. 

Xj 

15.  Sell  Boyd  &  Co.,  City,  on  account : 

100  bu.  Field  Corn  50  bu.  Eye 

100  bu.  Barley  10  bu.  Dwarf  Beans 

Write  the  invoice  and  record  it  in  the  sales  book. 

4  16.  Deposit  currency,  $200. 

Make  out  the  deposit  ticket.    Record  it  in  the  check  book. 

Place  the  currency  and  the  ticket  in  the  pass  book  and  hand  it  to  the  bank. 


112 


PRINCIPLES  OF  BOOKKEEPING 


March  17.  Pay  Henry  Bruce  by  check,  to  apply  on  account,  $112.50. 

Write  the  check  and  make  the  entry  in  the  cashbook.    How  do  you  dispose  of 
the  check? 


18.  Sell  Howard  Young,  City,  on  account,  at  the  prices  given  herewith: 

20  bu.  Clover  Seed  at  $8  10  bu.  Timothy  Seed  at  $3.40 

'SJ 

19.  Sell  Jesse  Watson,  City,  on  account,  at  the  price  given  herewith : 

'      200  bu.  Wheat  at  $1.25 

?.  Receive  of  Boyd  &  Co.  their  check,  on  account,  $200,  Form  9. 

Remove  the  check  and  enter  it  in  the  cashbook.  Place  the  check  in  the  Business 
Cask  envelope. 

y^i     . 

l***23.  Pay  Haynes  &  Co.  by  check,  to  apply  on  account,  $500. 
•  /^^  24.  Buy  of  S.  D.  Welch,  City,  on  account,  merchandise  as  per  invoice, 
Form  10.     <£&£ 
Examine  and  checVit. 

25.  Buy  of  Henry  Bruce,  City,  on  account,  merchandise  as  per  invoice, 
v    Form  11. 
-  >4  26.  Sell  John  Wells,  City,  on  account : 

50  bu.  Rye  150  bu.  Wheat 

-i  -\ 

27.  Give  S.  D.  Welch  your  note  at  15  da.,  to  apply  on  account,  $100. 

Write  the  note,  payable  at  my  office.  The  note  which  you  write  will  be  similar 
to  the  script  form  given  below.  The  signature  to  this  note  will  be  the  student's 
own  name. 

Make  the  entry  in  the  journal.  Dispose  of  the  note  according  to  directions 
received. 


afle.r  dote^zLpromise  to  pay  to 


the  order  o/ 


"    'Dollar* 


; 

7 


28.  Sell  Boyd  &  Co.,  City,  on  account: 

100  bu.  Wheat  10  bu.  Clover  Seed 

5  bu.  Dwarf  Beans  10  bu.  Garden  Corn 


SET  III.    GRAIN  AND  SEED  BUSINESS 


113 


March  29.  Receive  of  Jesse  Watson  his  note  at  30  da.,  in  full  of 
account,  Form  12. 

Remove  the  note  from  the  tablet.  Make  the  journal  entry.  Place  the  note  in 
the  Unpaid  Bills  envelope. 

3  z&r  Receive  of  John  Wells  his  check,  on  account,  §100,  Form  13. 
Place  the  check  in  the  Business  Cash  envelope. 

*~.  .^r^ell  Oscar  Wilson,  City,  for  cash,  at  the  prices  given  herewith, 
giving  in  payment  his  check,  .Form  14. 

50  bu.  Field  Corn  at  75  <£  100  1m.  Oats  at  60  ^ 

10  bu.  Garden  Corn  at  $3.80  150  bu.  Rye  at  $1.30 

Write  the  invoice  and  receipt  it.  Record  it  in  the  sales  book  and  the  cashbook. 
Remove  the  check  and  place  it  in  the  Business  Cash  envelope. 

.  Student  takes  from  the  business  for  his  monthly  salary,  $50. 

Take  $50  in  currency  from  the  Business  Cash  envelope  and  place  it  in  the 
envelope  for  Personal  Cash. 

31.  Deposit  the  three  checks  and  all  the  currency  on  hand. 

Take  the  currency  and  the  checks 
from  the  Business  Cash  envelope  ;  count 
the  currency  and  make  out  the  deposit 
ticket. 

Indorse  each  check,  as  shown  in  the 
accompanying  illustration. 

The  full  indorsement,  shown  in  the 
accompanying  illustration,  is  the  one 
most  commonly  used  in  business,  and 
some  banks  and  the  clearing  houses 
insist  that  this  form  must  be  used. 

Th^  blank  indorsement  is  simply  the 
writing  of  one's  name  on  the  back  of 
the  paper.  (See  page  118.) 

Place  the  currency  and  the  checks  in  the  pass  book  and  hand  it  to  the  bank. 
When  the  pass  book  is  returned,  examine  it  to  see  that  all  is  entered  correctly. 
\~ 

31.  Give  Henry  T.  Dale,  your  clerk,  a  check  for  his  salary,  $30. 

Monthly  Bank  Statement.  At  this  point  the  monthly  bank  statement 
should  be  made.  Proceed  as  follows : 

Enter  all  deposits  and  all  checks  on  the  statement  sheet.  Refer  to 
the  model  on  page  100.  Total  both  the  deposits  and  the  checks  and  find 
the  balance.  Place  the  checks  and  the  statement  sheet  in  the  envelope. 

If  the  deposits  and  the  checks  have  been  passed  to  an  office,  these  instructions 
should  be  followed  by  the  one  in  charge  of  that  work;  if  not,  the  student  may 
make  the  statement  himself. 


114  PRINCIPLES  OF  BOOKKEEPING 

Total  the  deposits  in  the  pass  book,  subtract  the  total  checks,  enter 
the  balance,  rule,  and  foot.  Bring  the  balance  down  under  April  1. 

Before  closing  the  books  hand  them  to  the  instructor  for  approval. 

Inventories.  Record  the  following  inventories  on  a  sheet  of  journal 
paper,  and  file  for  future  reference  : 

Inventories,  March  31,  19  — 
Merchandise  :  , 

15°  bu-  Barley  •*  ?   60  bu.  Oats  z  g  5  0 


i  x  o.  ^'^~       40  bu.  Dwarf  Beans  ^~~        50  bu.  Rye  S~° 

<•  o^_  •  ^  0/200  bu.  Field  Corn  ^        40  bu.  Timothy  Seed 

7TI7?D  3r-        20  bu.  Garden  Corn  /         50  bu.  Wheat 

AT.^.T»  __  . 

/  ,  3  o  ^™ce  Supplies  : 

Office  Books  $8. 

Office  Supplies  2.75         $10.75 

Office  Furniture,  at  cost  75. 

Fuel: 

Coal  on  hand  6.40 

Closing  the  Work  for  March.  Close  each  of  the  following  :  the  cash- 
book,  the  purchase  book,  and  the  sales  book,  liefer  to  pages  89—91. 

Open  accounts  in  the  ledger,  four  accounts  to  the  page,  in  the 
f  ollowing  order  ;  begin  on  the  page  indicated  by  the  index  : 

Cash  Accounts  Payable  :  l 

Notes  Receivable  E.  C.  Ferry 

Accounts  Receivable  :  l  S.  D.  Welch 

John  Williams  Henry  Bruce 

John  Wells  Haynes  &  Co. 

Boyd  &  Co.  C.  V.  Cronin 

Howard  Young  Smith  &  Bowers 

Jesse  Watson  'Student,  Prop. 

Oscar  Wilson  Profit  and  Loss 

P.  H.  Morse  Sundry  Expense  Inventory 

F.  G.  Morgan  Merchandise  Sales 

Johnson  &  Pease  Interest  Earned 

Merchandise  Inventory  Merchandise  Purchases 

Office  Furniture  Rent  Paid 

Notes  Payable  Office  Supplies 

Fuel 
Salaries 
Interest  Paid 

NOTE.    The  Interest  Earned  account  will  not  be  used  until  April. 

1  Do  not  open  an  account  with  Accounts  Receivable  nor  Accounts  Payable. 


SET  III.    GRAIX  AND   SEED   BUSINESS  115 

1.  Post  from  the  journal,  writing  </.   in  the  explanatory   column  of 
the  ledger. 

2.  Post  from  the  cashbook,  writing  C.tt.  in  the  explanatory  eolumn 
of  the  ledger. 

3.  Post  from   the   purchase  book,  writing  P.'B.  in  the  explanatory 
column  of  the  ledger. 

,  4.  Post  from  the  sales  book,  writing  S. B,  in  the  explanatory  column 
of  the  ledger. 

Foot  the  ledger  accounts. 

Take  a  trial  balance ;  have  it  approved,  and  then  record  it  in  Blank 
No.  1,  on  the  page  indicated  by  the  index. 

Make  the  statements;  after  approval  record  them  in  Blank  No.  1, 
on  the  page  indicated  by  the  index. 

Close  the  ledger.    Make  the  necessary  journal  entries  and  postings. 
•       Take  a  second  trial  balance. 

Submit  all  work  to  the  instructor  for  approval. 

When  the  monthly  statement  of  your  bank  account  has  been  com- 
pleted, compare  each  check  with  the  stub  in  the  check  book  ;  if  they 
agree,  put  a  large  check  mark  on  the  stub.  This  check  mark  shows 
that  the  check  issued  has  been  returned  canceled. 

Does  the  balance  of  your  monthly  bank  statement  agree  with  the  balance  shown 
in  your  check  book  ? 

Exercise  34.    Review 

For  Written  Work 

1.  Journalize  orally  or  in  writing  each  transaction  in  March. 
It  is  suggested  that  the  amounts  be  omitted. 

2.  Use  Exercise  25,  I  and  II,  for  closing  the  ledger. 

After  the  amounts  have  been  transferred  to  a  ledger  sheet  do  not  refer  to  the  text 
when  closing  the  ledger. 

3.  Make  a  study  of  your  bank  account  and   answer   the   following 
questions : 

a.  What  items  are  recorded  in  your  pass  book  ? 

b.  When  a  deposit  consists  of  both  currency  and  checks,  how  is  it 
properly  made  up  ? 

c.  Describe  briefly  the  manner  of  keeping  a  record  of  deposits  and 
checks  in  the  check  book. 

d.  How  would  you  prove  cash  if  no  bank  account  were  kept  ? 

e.  How  would  you  prove  cash  when  you  keep  a  bank  account  ? 

/.  Name  six  important  things  to  be  observed  in  the  writing  of  a  check. 


116 


PRINCIPLES  OF  BOOKKEEPING 


Exercise  35. 

Review 

For  Written 

Work 

Make  the  statements  from  each  of  the  t 

following  trial 

balances.    Date  each 

statement  March  31,  19  —  . 

1. 

Cash 

8682.50 

Notes  Receivable 

399.90 

Henry  Wilson 

207.65 

Landis  &  Co. 

214.10 

Mdse.  Inventory 

900. 

Office  Furniture 

96.40 

Notes  Payable 

$100. 

Sullivan  &  Co. 

45.20 

West  &  Son 

101.05 

John  S.  Albert,  Prop. 

2200. 

Mdse.  Sales 

1933.20 

Interest  Earned 

8.65 

Mdse.  Purchases 

1702.20 

Office  Supplies 

22.50 

Rent  Paid 

37.50 

Salaries 

110. 

Interest  Paid 

15.35 

$4388.10 

14388.10 

Inventories,  March  31  : 

Merchandise 

$1086.80 

Office  Furniture 

96.40 

Office  Supplies 

10.75 

2. 

Cash 

$456.30 

Notes  Receivable 

226.75 

Ferry  &  Lake 

276.85 

• 

Nelson  &  Son 

392.10 

Mdse.  Inventory 

500. 

Weller  &  Co. 

$94.25 

Lee  &  Price 

105.50 

Warren  D.  Mason,  Prop. 

1800. 

Mdse.  Sales 

1655.10 

Interest  Earned 

16.60 

Mdse.  Purchases 

1772.50 

Fuel 

35.50 

Interest  Paid 

11.45 

, 

$3671.45 

$3671.45 

Inventories,  March  31  : 

Merchandise 

$898.65 

Fuel 

10.50 

SET  III.    GKAIN  AND  SEEJ)   BUSINESS  117 

Exercise  36.    Problems 

For  Written  \\'<>rk 

1.  Use  one  sheet  (two  pages)  of  ledger  paper.    Refer  to  Exercise  35 ; 
open  an  account  with  the  Proprietor  and  each  proiit  or  loss  account 
that  is  found  in  problem  1  ,  allow  six  lines  for  each  account.    Make  the 
necessary  entries  and  postings  to  close  the  ledger. 

The  inventories  are  to  be  found  just  below  the  trial  balance. 

2.  In  Exercise  35,  analyze  each  debit  and  each  credit  in  trial  balances 
1  and  2. 

3.  Each  student  is  to  use  his  own  ledger  for  the  month  of  March, 
in  the  following  exercises : 

a.  Analyze  each  open  ledger  account. 

b.  Analyze  each  profit  or  loss  account  before  it  was  closed. 

c.  Analyze  each  profit  or  loss  account  after  it  was  closed. 

4.  Each  student  is  to  use  his  own  cashbook  for  the  month  of  March, 
in  answering  the  following: 

a.  Tell  why  each  name  under  Cash  Received  represents  a  credit. 

b.  Why  is  the  total  cash  received  a  debit  ? 

c.  Tell  why  each  name  under  Cash  Paid  represents  a  debit. 

d.  Why  is  the  total  cash  paid  a  credit  ? 

5.  Give  the  journal  entry  for  each  entry  under  Cash  Jlecr'tved. 

6.  Give  the  journal  entry  for  each  entry  under  Cash  ]*«!<!. 

7.  Give  the  journal  entry  for  each  entry  in  the  sales  book. 

8.  Give  the  journal  entry  for  each  entry  in  the  purchase  book. 

Drill  work  like  the  above  clearly  established  the  fact  that  all  entries,  no  matter 
in  what  book  the  entry  may  be  made,  are  expressed  and  recorded  as  debits  and  credits. 


CHAPTER  VIII 


INDORSEMENTS   AND   INTEREST 

Indorsements.  An  indorsement  is  the  writing  of  one's  name  on  the 
back  of  commercial  paper  with  the  intent  to  transfer  the  title  or  to 
assume  legal  responsibility  for  its  payment. 

Sometimes  a  payment  of  interest,  or  a  partial  payment  of  the  face,  is  recorded 
on  the  back  of  an  instrument. 

The  object  of  indorsement  is  to  effect  a  transfer  of  the  title,  or  to 
make  the  indorser  conditionally  liable  for  payment,  or  both. 

Indorsements  are  made  by  using  a  rubber  stamp  or  by  writing. 
When  the  signature  is  the  name  of  a  firm,  the  name  or  the  initials  of  the 
person  writing  the  signature  may  be  written  just  underneath,  as  follows : 

Brown,  Smith  &  Co. 
per  J.  E.  Brown 

The    indorsements    most    commonly    used    are    the    special,    or  full, 
the   blank,   the    qualified,   and   the 
restrictive. 

A  special,  or  full,  indorsement 
names  the  indorsee  ;  the  instrument 
could  not  again  be  negotiated  with- 
out the  indorsee's  indorsement. 

A  blank  indorsement  names  no 
indorsee.  Any  holder  may,  how- 
ever, convert  this  into  a  special 
indorsement  by  writing  "Pay  to 
(his  name)  or  order"  above  the 
blank  indorsement. 

A  qualified  indorsement  simply 
passes  the  title  without  rendering 


SPECIAL,   OR   FULL,   INDORSEMENT 


15LANK  INDORSEMENT 


^^ 


QUALIFIED  INDORSEMENTS 
118 


INDORSEMENTS  AND   INTEREST  119 

the  indorser  liable.     In  form,  this  indorsement  may  be  either  in  blank 
or  special.    This  indorsement  is  not  often  used. 

A  restrictive  indorsement  constitutes  the  indorsee   an  agent  of  the 
indorser,  usually  for  the  collection  of  the  paper  by  a  bank. 


This  form  of  indorsement  is  not 
mended  by  banks  and  clearing  houses. 

Note  the  indorsement  on  page  1  13. 
All  commercial  paper  offered  for 
deposit  at  a  bank  must  be  indorsed, 
and  the  special,  or  full,  indorsement 

1  i  KK.VIKICTIVK    JXDOKSli.MKNT 

is  most  commonly  used. 

This  form  is  a  protection  to  the  lawful  holder  because  the  payee  is 
named,  and  payment  will  be  made  only  on  his  order,  by  indorsement. 

If  a  check  or  a  note  bearing  a  special  indorsement  is  lost  or  stolen, 
it  is  valueless  to  the  holder. 

When  one  has  a  check  cashed  at  the  bank,  the  blank  indorsement 
may  be  used,  as  the  check  will  be  canceled  as  soon  as  cashed. 

As  the  qualified  indorsement  relieves  the  indorser  of  responsibility 
for  payment,  commercial  paper  bearing  this  indorsement  should  be 
accepted  with  great  caution. 

Interest.  The  rate  of  interest  allowed  by  law  is  called  the  l<><j<d 
rate.  Persons  may  agree  to  pay  less  than  this  rate,  but  not  more, 
unless  a  higher  rate  by  special  agreement  is  permitted  by  statute.  If 
an  agreement  for  the  payment  of  interest  specifies  no  rate,  the  legal 
rate  in  the  state  where  the  contract  is  signed  will  be  understood. 

In  the  commercial  ivorld  12  mo.  of  30  da.  each  —  3<.!0  da.  —  are  reck- 
oned as  1  yr.  In  bank  discount  the  exact  number  of  days  is  used. 

Throughout  the  business  practice  employed  in  this  text  the  rate  will 
be  6%,  based  on  the  commercial  year  of  360  da. 

This  method  is  not  exact,  but  it  is  the  most  common  because  the  most  con- 
venient. It  has  been  legalized  by  statute  in  some  states  and  is  generally  used  in 
all  the  states. 

A  great  variety  of  methods  is  employed  to  compute  interest  and  dis- 
count, but  it  is  suggested  that  the  student  use  the  day  method  as  follows  : 
Point  off  to  the  left  three  decimal  places  in  the  principal,  multiply  by 
the  number  of  days,  and  then  divide  by  6.  Cancel  when  possible. 

ILLUSTRATION.    What  is  the  interest  on  $146.50  for  50  da.  at  6%  ? 

Solution  :  .1465  x  50  =  7.325. 

» 

7.325  +  6  —  1.22,  or  $1.22,  the  required  interest. 


120  PRINCIPLES  OF  BOOKKEEPING 

The  maturity  of  negotiable  paper  is  determined  as  follows :  when 
the  time  is  expressed  in  months,  calendar  months  are  used  to  fix  the 
date  of  maturity ;  but  when  the  time  is  expressed  in  days,  the  exact 
number  of  days  is  used. 

ILLUSTRATION*  A  note  4ated  Jan.  28,  29,  30,  or  31,  at  1  mo.,  will  mature  on 
Feb.  28  (leap  years  excepted)  ;•  but  a  note  with  any  of  the  dates  just  noted,  at 
30  da.,  will  mature  on  Feb.  27,  28,  March  1,  or  2,  respectively. 

Exercise  37.    Interest  Entries 
For  Written  Work 

Enter  the  following  transactions,  using  a  aheet  of  journal  paper  for  the 
cashbook ;  balance  and  rule  the  cashbook. 

SUGGESTION.  This  exercise  is  not  a  set,  but  a  series  of  illustrations.  It  may  be 
used  first  as  an  oral  exercise. 

May  1.  Student  begins  business  and  invests  cash,  $1600. 

2.  Give  Henry  A.  Dunton  a  cheek  for  your  note,  which  falls  due 
to-day,  1172.50. 

4.  Receive  a  check  from  Henry  A.  Gray  for  his  note,  which  is  due 
to-day,  $235.20. 

6.  Pay  your  note  and  interest,  due  to-day,  in  favor  of  H..H.  James, 
in  cash.  Face  of  the  note,  $325 ;  interest,  $11.50. 

8.  Receive  of  Hale  &  Son  their  check  for  their  note  and  interest, 
due  to-day.    Face  of  the  note,  $220.35;  interest,  $7.75. 

9.  Receive  a  check  from  W.  K.  Marsh  for  his  note,  which  is  due 
to-day.    Face  of  the  note,  $300. 

10.  Pay  your  note  and  the  interest,  due  to-day,  in  favor  of  Geo.  R. 
Gushing.    Face  of  the  note,  $400 ;  interest  for  30  da. 

11.  Receive  a  check  from  Johnson  &  Co.  for  their  note,  due  to-day. 
Face  of  the  note,  $256.25. 

15.  Pay  your  note  and  the  interest,  due  to-day,  in  favor  of  E.  R. 
Sterling.  Face  of  the  note,  $222.40  ;  interest  for  60  da. 

20.  Receive  a  check  from  T.  T.  Hunger  for  his  note  and  the  interest, 
due  to-day.  Face  of  the  note,  $257.80 ;  interest  for  60  da. 

25.  Make  an  additional  investment  in  the  business  in  cash,  $750. 


CHAPTER  IX 


SET  III.    GRAIN  AND  SEED  BUSINESS  (CONTINUED) 
WORK   FOR  APRIL 

The  memoranda  following  are  a  continuation  of  the  memoranda  for 
March.  No  new  principles  are  introduced,  and  the  familiar  business 
forms  are  used.  As  such  full  and  explicit  instructions  were  given  in 
March,  much  explanatory  matter  will  he  omitted  in  April.  If  any  thing- 
is  not  understood,  refer  to  a  similar  transaction  in  the  preceding  month. 

Incoming  Business  Forms  for  April.  The  following  list  of  forms  is  a 
continuation  of  the  list  for  March: 

Form  15.    Invoice  of  Henry  Bruce,  City,  April  (i.    Terms  :  on  account. 

t,^%&    50  bu.  Clover  Seed  •$&    300  1m.  Oats 

fc  J0         •?.*>    50  bu.  Garden  Corn        >.*"*=+*     100  bu.  Barlev 

Form  16.    Invoice  of  S.  D.  Welch,  City,  April  9.    Terms'? 'on  account. 
•<•*     200  bu.  Field  Corn  A    100  bu.  Rye        *•  &  t 

'**>.  f.     200  bu.  Wheat 

Form  17.    Invoice  of  C.  V.  Cronin,  City,  April  11.    Terms  :   cash. 

Z  6  ° 

50  bu.  Timothy  Seed  -»  * 

Form  18.    Note   of  Boyd  &   Co.,   City,   for  $100,   in   your   favor,   at   10  da., 

April  14. 

Form  19.    Check  of  Howard  Young,  City,  for  $193,  in  your  favor,  April  "15. 
Form  20.    Check  of  Boyd  &  Co.,  City,  for  $165,  in  your  favor,  April  2.S. 
Form  21.    Check  of  Boyd  &  Co.,  City,  for  $100,  in  your  favor,  April  24. 
Form  22.    Invoice  of  Smith  &  Bowers,  City,  April  25.    Terms  :   cash. 

/^.         &-~  -    20  bu.  Dwarf  Beans  200  bu.  Field  Corn  ^  /  /, 

^o  O-   -  50  bu.  Garden  Corn 

>^ 

Form  23.  Check  of  Jesse  Watson,  City,  for  $175,  in  your  favor,  April  27. 

Form  24.  Check  of  Jesse  Watson,  City,  for  $251.25,  in  your  favor.  April  28. 

Form  25.  Check  of  Howard  Young,  City,  for  $125,  in  your  favor,  April  29. 

Opening  the  Work  for  April.  The  following  general  directions  should 
be  observed: 

1.  Use  the  same  price  list,  the  same  books,  etc.,  as  in  March. 

2.  Begin  a  new  page  in  the  journal.   In  the  sales  book,  leave  a  space  of 
three  lines,  then  write  the  first  sale  in  April  under  the  last  sale  in  March. 

121 


122  PRINCIPLES  OF  BOOKKEEPING 

3.  The  balance  brought  down  from  the  cash  account,  under  April  1, 
is  to  be  reckoned  with  the  cash  receipts  in  April.  Use  a  new  sheet  for 
the  bank  account.  Record  the  balance  at  the  head  of  the  deposit  column. 

MEMORANDA  OF  TRANSACTIONS  FOR  APRIL 

April  1.  Give  Amos  Graves  your  check  for  the  rent  of  the  store 
for  April,  $35. 

1.  Give  Henry  Bruce  your  check  in  full  of  account. 

'  Turn  to  Henry  Bruce's  account  in  the  ledger  and  find  the  balance  of  his  account ; 
write  the  check  for  this  amount. 


3.  Receive  of  Howard  Young  cash  in  full  of  account. 

Turn  to  Howard  Young's  account  in  the  ledger  and  verify  the  balance.    Write 
the  receipt  and  get  the  money.    Enter  it  in  the  cashbook. 

Cj?      6.  jBuv^  of   Henry  Bruce,   City,   on   account,   merchandise    as   per 
invoice,  Form  15. 

7.  Sell  Howard  Young,  City,  on  account,  at  the  prices  given  herewith : 

1  C.     100  bu.  Field  Corn  at  750  50  bu.  Barley  at  $1     J ». 

£  *  •  o  a  20  bu.  Timothy  Seed  at  $3.40 

9.  Give  S.  D.  Welch  your  check,  to  apply  on  account,  for  $200. 
9.  Buy  of  S.  D.  Welch,  City,  on  account,  merchandise  as  per  invoice, 
Form  16. 


10.  Sell  Boyd  &  Co.,  Cit^,  on  account: 

30  bu.  Garden  Corn' '  V  20  bu.  Clover  Seed 

100  bu.  Oats 

11.  Buy  of  C.  V.  Cronin,  City,  for  cash,  merchandise  as  per  invoice, 
Form  17. 


Write  a  check  in  payment. 

11.  The  note  in  favor  of  S.  D.  Welch  falls  due  to-day;  pay  it  by 

•L          1  /    0-~. 

check. 

Write  the  check.  Pass  it  in  and  receive  the  canceled  note.  The  note  will  be  can- 
celed by  writing  across  the  face  Paid  April  11,  19 — ,  and  the  name  of  the  payee. 
Make  the  entry  in  the  cashbook.  What  account  is  debited  in  the  cashbook  ?  Place 
the  canceled  note  in  the  Paid  Bills  envelope. 


12.  Sell  P.  H.  Morse,  City : 

3j  *~    20  bu,  Timothy  Seed 
J^ C  10 

Receive  cash,  $125 ;  balance  on  account. 


20  bu,  Timothy  Seed  100  bu.  Field  Corn 

lOObu.  Wheat       13 


SET  III.    GRAIN  AND  SEED  BUSINESS  123 

Write  the  bill.  Terms  :  cash,  $125  ;  balance  on  account.  Enter  the  entire  bill  in 
the  sales  book,  and  the  cash  received  in  the  cashbook  as  a  receipt  on  account.  Record 
the  amount  of  the  cash  011  the  bill  and  receive  the  money. 


April  13.  Give  Henry  Bruce  your  note  at  15  da.,  with  interest,  to 
apply  on  account,  for  |200,  payable  at  Ids  office. 

14.  Receive  of  Boyd  &  Co.  their  note  at  10  da.,  to  apply  on  account, 
for  $100,  Form  18. 

Place  the  note  in  the  Unpaid  Bills  envelope. 


15.  Sell  Jesse  Watson,  City,  on  account  : 

/f  20  bu.  Dwarf  Beans  50  bu.  TCye 

*^       50  bu.  Barley  10  bu.  Timothy  Seed 

15.  Receive   of   Howard  Young   his   check  for   invoice   of   April  7, 
Form  19.  '  ?:»,  - 

.  Deposit  the  check  and  all  currency  on  hand  except  $25. 

Give  S.  D.  Welch  your  check  in  full  for  the  invoice  of  April  9. 

•^  j- 
Verify  the  amount  by  referring  to  the  purchase  book.  •    - 

^J  19.  Sell  Howard  Young,  City,  on  account,  at  the  price  given  herewith  : 

100  bu.  Wheat  at  $1.25    -^^7 

^*  20.  Sell  F.  G.  Morgan,  City,  for  cash,  at  the  prices  named  herewith  : 
10  bu.  Clover  Seed  at  $8  10  bu.  Timothy  Seed  at  $3.40 

Write  a  receipted  bill  and  enter  it  in  the  sales  book  and  thejjashbook.    Pass  in 
the  bill  and  receive  the  currency. 

^  21.  Sell  Boyd  &  Co.,  City,  on  account  : 

30  bu.  Timothy  Seed  20  bu.  Garden  Com 

50  bu.  Barley  40  bu.  llye 

22.  Sell  John  Wells,  City,  on  account  : 

•-^          200  bu.  Oats  50  bu.  Barley 

100  bu.  Field  Corn 


23.  Receive  of  Boyd  &  Co.  their  check,  to  apply  on  account,   for 
$165,  Form  20. 

—      » 

24.  Receive  of  Boyd  &  Co.  their  check,  in  payment  of  their  note  due 
to-day,  for  $100,  Form  21. 

Enter  the  amount  of  the  check  in  the  cashbook.   Under  what  name?   Cancel  the 
note  and  pass  it  in. 

24.  Deposit  the  two  checks  and  all  currency  on  hand. 
Indorse  the  checks. 


124  PRINCIPLES  OF  BOOKKEEPING 

April  25.  Buy  of  Smith  &  Bowers,  City,  for  cash,  merchandise  as  per 
invoice,  Form  22.  jf  ^  3 

Examine  and  check  the  invoice ;  if  correct,  pay  it  by  check  Enter  in  the  pur 
chase  book  and  the  cashbook. 

Where  is  this  invoice  filed? 

v    26.  Sell   Johnson    &    Pease,    City,    for   cash,    at   the    prices   named 
herewith : 

10  bu.  Dwarf  Beans  at  $8  100  bu.  Field  Com  at  750 

25  bu.  Garden  Corn  at  $3.80 

After  entering  the  invoice  in  the  required  books  receipt  it,  pass  it  in,  and  receive 
the  currency. 

How  is  this  invoice  receipted  ? 

27-  Receive  of  Jesse  Watson  his  check,  to  apply  on  account,  for 
$175,^Form  23. 

.  Give  Henry  Bruce  your  check  for  your  note  and  the  interest,  due 
to-day.     Face  of  the  note,  $200;  interest,  500. 

What  two  entries  are  made  in  the  cashbook?  Remember  to  cancel  and  file 
the  note. 

How  is  this  note  canceled? 

28.  Receive  of  Jesse  Watson  his  check  for  note  and  interest  due 
to-day,  Form  24.  Face  of  the  note,  &25IU,  interest. Jfcl.25. 

What  two  entries  are  made  in  the  cashbook?    Cancel  the  note  and  pass  it  in. 
What  is  the  value  of  a  canceled  note  ? 

'    29.  Receive  of  Howard  Young  his  check  for  the  invoice  of  April  19, 
Form  25.       /  2.  *^.  - 

30.  Give  Henry  T.  Dale,  your  clerk,  a  check  for  his  salary,  $30. 
30.  The   Proprietor  takes   from   the   business  cash  for  his  monthly 
salary,  $50. 

30.  Deposit  the  checks  and  all  currency  on  hand. 

SO.  Withdraw  by  check  the  balance  on  deposit  in  The  Union  Bank. 

This  withdrawal  is  made  as  a  matter  of  convenience  in  closing  the  set.  The 
amount  of  the  check  is  for  the  balance  in  the  bank.  Make  the  check  payable  to  Self 
and  pass  it  in.  No  entry  is  required. 

Monthly  Bank  Statement.  Proceed  with  your  bank  account  as  you 
did  at  the  close  of  March. 

What  is  the  value  of  the  monthly  bank  statement  to  the  depositor  at  the  close 
of  each  month? 

Before  closing  the  books  hand  them  to  the  instructor  for  inspection 
and  approval. 


SET  III.    GRAIN  AND   SEED   BUSINESS  125 

Inventories.  Record  the  following  inventories  on  a  sheet  of  journal 
paper,  at  the  cost  price,  and  file  for  future  reference : 

Inventories,  April  30,  19 — 
Merchandise : 

^  V^5  50  bu.  Barley  45  bu.  Garden  Corn 

20  bu.  Clover  Seed  (50  bu.  Oats 

30  bu.  Dwarf  Beans  GO  1m.  Rye 

~  200  bu.  Field  Corn  50  bu.  Wheat 

Office  Furniture : 
Office  Safe 
Office  Supplies  7.50 

Closing  the  Set.  After  looking  over  the  closing  of  each  book  in 
March,  close  the  cashbook,  the  purchase  book,  and  the  sales  book. 

The  careful  bookkeeper  checks  his  work  (it  m-cr/i  fttf-.p.  Check  all  additions  before 
writing  the  results  in  ink.  A  simple  way  to  chvk  a<]<lition  is  to  add  the  columns  in 
reverse  order.  If  the  results  agree,  the  work  may  be  assumed  to  IK-  correct. 

Post  the  books  to  the  ledger.    Post  to  the  same  accounts  as  in  March. 

Foot  the  ledger  accounts. 

Take  a  trial  balance;  after  approval,  record  it  in  Blank  No.  1,  on 
the  page  indicated  by  the  index. 

Make  the  statements;  after  approval,  record  them  in  Blank  No.  1. 
on  the  page  indicated  by  the  index. 

Close  the  ledger.    Make  the  necessary  journal  entries  and  postings. 

Take  a  second  trial  balance. 

Submit  all  work  to  the  instructor  for  approval. 

When  your  monthly  bank  statement  has  been  completed,  compare  each 
check  with  the  stub  in  the  check  book ;  if  they  agree,  check  the  stub. 

Exercise  38.    Review 
For  Written  Work 

1.  Journalize  orally  or  in  writing  each  transaction  hi  Set  III  for  April. 
It  is  suggested  that  the  amounts  be  omitted. 

2.  In  the  text,  turn  to  Exercise  36;  use  your  own  ledger  and  ana- 
lyze the  work  for  April  in  the  same  manner  as  given  in  problems  3, 
4,  5,  6,  7,  and  8. 

3.  a.  On  a  sheet  of  ledger  paper  copy  the  following  ledger  accounts, 
allowing  eight  lines  for  each  account: 


126 


PBINCIPLES  OF  BOOKKEEPING 

MERCHANDISE  INVENTORY 


19— 

Apr. 


Student,  PKOPRIETOR 


MERCHANDISE  SALES 


INTEREST  EARNED 


19— 
Apr. 

1 

2 

2340 

19— 

Apr. 

13 

2 

321 

40 

18 

3 

450 

24 

4 

257 

80 

26 

5 

335 

55 

30 

6 

421 

35 

19— 

Apr. 

17 

5 

7 

85 

26 

6 

14 

65 

MERCHANDISE  PURCHASES 


id- 

Apr. 

11 

2 

453 

25 

16 

3 

745 

20 

20 

3 

352 

45 

25 

4 

551 

90 

SET  III.    GRAIN  AND   SKKI)    IH'SIXESS 
OFFICE   SUIM-LI  i:s 


127 


19— 

Apr. 

11 

5 

0 

50 

16 

(J 

11 

25 

23 

6 

10 

25 

E.KXT  PAID 


Apr. 


45 


INTEREST  PAID 


19— 

Apr. 

13 

4 

o 

75 

• 

22 

5 

13 

35 

Inventories,  April  30 : 

Merchandise  $1453.70 

Office  Supplies  11.25 

b.  Open  the  following  accounts :  Profit  and  Loss,  Merchandise  Inven- 
tory, and  Sundry  Expense  Inventory. 

c.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 
4.  Write  from  memory  on  blank  paper,  cut  to  the  proper  size,  the 

following  business  forms: 

a.  A  Receipted  Bill.    Jan.  17,  jC.  H.  Palmer,  Trenton,  N.J.,  bought 
of  Student  for  cash,  less  3%  :    25  doz.  table  knives  at  $7.50,  15  doz. 
nail  hammers  at  $9,   25  doz.  safety  locks  at  $4.50. 

b.  A  Promissory  Note.     Jan.  20,   Student  gave  James  B.   Stevens   a 
60-day  interest- bearing  promissory  note  payable  at  First  National  Bank. 
Face  of  the  note,  $125. 

c.  A  Receipt.    Jan.  22,  Frank  H.  Jackson  paid  Student  $127.85  in 
full  for  invoice  of  Jan.  12. 

d.  A  Check.    Jan.  25,  Student  gave  William  E.  Hitchcock  a  check  on 
Commonwealth  Trust  Company  for  $2( 


CHAPTER  X 


SET  IV.    GENERAL  HARDWARE  BUSINESS 
PRELIMINARY  EXPLANATIONS 

The  object  of  this  set  is  to  continue  the  work  of  Set  III  and  to  give 
more  extended  business  practice.  A  partnership  is  introduced. 

Partnership.  A  partnership  is  a  contract  relation  between  persons 
who  combine  their  property,  labor,  or  skill  in  a  business,  and  who 
agree  to  share  the  profits  and  the  losses  jointly.  The  agreement  may 
be  verbal  or  written,  preferably  the  latter. 

The  most  usual  clauses  in  the  written  articles  of  partnership  are : 

1.  Name  of  the  firm  6.  Salaries  to  be  paid  to  the  partners 

2.  Nature  of  the  business     „  7.  Interest  on  invested  capital 

3.  Place  of  business  8.  Division  of  profit  and  loss 

4.  Date  of  commencement  and  du-  9.  Provision  for  dissolution 

ration  of  partnership 

5.  Capital  to  be  invested,  and  pro- 

visions for  its  withdrawal 

The  Cashbook.  A  cashbook  slightly  different  in  form  from  the  one 
already  used  is  introduced  in  Set  IV.  This  form  has  three  columns 

Cash  Received 


F. 

Net 
Cash 

Disc,  on 

Sales 

General 

May 

1 

Student,  Investment 

1000 

1000 

1 

W.  K.  King,  Investment 

1000 

1000 

4 

John  M.  Jones                Inv.  4/20,  less  3% 

97 

3 

100 

9 

Henry  Upson                   Inv.  5/2 

85 

85 

20 

David  L.  Wing                Inv.  5/6,  less  2% 

122 

50 

2 

50 

125 

Balance                        On  hand 

2304 

50 

5 

50 

2310 

June 

1 

1293 

75 

0 

1293 

75 

LEFT-HAND    PAGE    OF    CASHBOOK,   SET    IV 
128 


SET  IV.    GENERAL  HARD\YAUE  BUSINESS 


129 


on  each  side,  as  shown  in  the  illustration  brlo\v.  Kach  net  receipt  of 
cash,  other  than  that  received  for  merchandise  sold,  less  discount,  is 
entered  in  the  Net  Cash  column  and  in  the  G-ent'ml  column. 

For  merchandise  sold,  less  discount,  enter  the  nut  amount  in  the  Net 
Cash  column,  the  discount  on  the  invoice  in  the  Discount  on  Sale* 
column,  and  the  sum  of  these  two  items  in  the  G<nn'i'al  column. 

Each  net  payment  of  cash,  except  for  merchandise  purchased,  less  dis- 
count, is  entered  in  the  Net  Cash  column  and  in  the  General  column. 
For  merchandise  purchased,  less  discount,  enter  the  net  amount  in  the 
Net  Cash  column,  the  discount  on  the  invoice  in  the  Discount  on  Pur- 
chases column,  and  the  sum  of  these  two  items  in  the  General  column. 

In  this  cashbook  the  sum  of  the  footings  of  the  first  two  columns,. 
on  either  side,  should  always  equal  the  footings  of  the  third  column. 

To  post  the  cash  receipts :  credit  each  item  in  the  General  column  ; 
debit  the  footing  of  the  Net  Cash  column  to  the  Cash  account  in  the 
ledger,  and  debit  the  footing  of  the  Discount  on  S<ih>s  column  to  the 
Discount  on  Sales  account  in  the  ledger.  The  small  circle  underneath 
these  columns  is  for  the  ledger  page. 

To  post  the  cash  payments :  debit  each  item  in  the  General  column  ; 
credit  the  footing  of  the  Net  Cash  column  to  the  Cax/i  account  in  the 
ledger,  and  credit  the  footing  of  the  Discount  on  Purchases  column  to 
the  Discount  on  Purchases  account  in  the  ledger. 

Rule  a  very  light  line  under  the  balance.  Do  not  use  the  balance 
in  footing  either  column  when  closing  the  cashbook. 

Cash  Paid 


F. 

Cas 

t         Disc,  on 
General 
n         I  urch. 

May 

1 

Rent  Paid                         For  May                       10 

10 

6 

Office  Supplies                  Stationery,  etc. 

0 

50 

!)  ;  50 

11 

Warren  &  Co.                   Inv.  5/1,  less  2% 

171 

50 

:}    50       175 

17 

Elson  &  Son                     Inv.  5/15,  less  1% 

272 

25 

2    75      275 

20 

Student,  Drawing             For  personal  use 

50 

50 

20 

W.  K.  King,  Drawing 

50 

50 

22 

Notes  Payable                 Favor  Way  &  Co. 

300 

:;i)0 

25 

Wilson  &  Co.                    Inv.  5/19                      S7 

50                          *7    50 

30 

Salary                               Of  clerk 

30 

30 

1010    75 

(j  •  25    1017    no 

© 

© 

RIGHT-HAND    PAGE    OF    CASHBOOK,   SET    IV 


130 


PRINCIPLES  OF  BOOKKEEPING 


Selling  Price  Lists.  The  table  below  gives  twenty -five  different  selling 
price  lists,  any  one  of  which  may  be  used  if  the  instructor  so  desires. 

Buying  Price  List.  In  Set  IV  all  merchandise  is  to  be  bought  at  the 
following  prices : 

BUYING  PRICE  LIST  FOR  MAY  AND  JUNE 


ARTICLE  AND  QVANTITY 

COST 

Carpenter's  Chisels,  i-in..,  cloz.        

$4.20 

Coal  Hods,  doz  

4.50 

Door  Knobs  doz.             

•75 

Family  Scales,  each   

1.75 

Grindstones,  each                  .  •  

1. 

Hammers,  doz.       .           

9. 

Handsaws,  doz  •  

18. 

Ice-cream  Freezers,  each      

2.50 

Knives  and  Forks,  set     

3.75 

Lanterns,  doz  

8. 

Meat  Choppers,  doz  

12. 

Mortise  Locks,  doz.          .                .-               . 

6. 

Nails,  8d,  wire,  keg    

3.20 

Planes,  $4,  doz  

24. 

Railroad  Picks,  9  lb.,  doz  

10. 

Steel  Axes,  doz  

12. 

Try-squares,  6-in.,  doz  ... 

2.50 

SELLING  PRICE  LISTS 

f 


ARTICLE  AND  QUANTITY 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

.   Carpenter's  Chisels,  ^-in.,  doz. 

5.25 

5.30 

5.35 

5.20 

5.40 

5.18 

5.22 

5.37 

5.74 

5.30 

'Coal  Hods,  doz  

5.80 

5.85 

5.72 

5.84 

5.74 

I  5.90 

5.88 

5.83 

5.75 

5.78 

Door  Knobs,  doz  

1. 

1.03 

1.06 

1.10 

1.08 

1.07 

1.12 

.98 

.99 

1.11 

Family  Scales,  each   .     . 

2.20 

2.10 

2.14 

2.18 

2.22 

•2.  Ob 

2.13 

2.19 

2.21 

2.20 

Grindstones,  each  .... 

1.25 

1.40 

1.45 

1.50 

1.30 

!  1.35 

1.39 

1.43 

1.37 

1.28 

Hammers,  doz  

12. 

12.06 

12.22 

12.25 

12.30 

12.50 

12.45 

12.55 

12.60 

12.05 

Handsaws,  doz  

24.  • 

24.20 

24.25 

24.32 

23.50 

2340 

24.50 

2485 

24.09 

24  10 

Ice-cream  Freezers,  each     . 

3.10 

3.25 

3.20 

3.30 

3.12 

3.32; 

3.35 

3.40 

3.31 

3.26 

Knives  and  Forks,  set     .     . 

4.80 

4.75 

4.90 

4.95 

5. 

4.82 

4.92 

4.85 

4.95 

4.80 

Lanterns,  doz  

10.20 

10.25 

1030 

1035 

10  40 

JO  45 

10  50 

10  55 

1045 

1048 

Meat  Choppers,  doz.  . 

16. 

17.50 

17. 

16.25 

15.80 

10.21 

16.26 

16.31 

16.36 

16.41 

Mortise  Locks,  doz.    .     .     . 

8. 

8.20 

8.15 

8.10 

7.90 

7.!)."> 

7.80 

7.95 

8.25 

8.30 

Nails,  8d,  wire,  keg    .     .     . 

4.10 

4.20 

4.25 

4.09 

4.12 

4.15 

4.18 

4.22 

4.16 

4.12 

Planes,  $4,  doz  

30.    . 

32. 

29. 

31. 

33. 

29. 

28. 

27.50 

30. 

28.50 

Railroad  Picks,  9  lb.,  doz.   . 

12.50 

13. 

13.25 

12.60 

13.40 

12.40 

12.50 

12.75 

13.10 

13.20 

Steel  Axes,  doz  

15.50 

1560 

15  75 

15  25 

15  50 

*15  70 

15  80 

1530 

1515 

1520 

Try-squares,  6-in.,  doz.  .     . 

3.20 

3.10 

3. 

3.05 

3.25 

3.28 

3.30 

3.35 

3.35 

3.10 

SET  IV.    GENERAL  IIAKDWAUE  BUSINESS 
WORK  FOR  MAY 


131 


Incoming  Business  Forms  for  May.    Please  read  the  instructions  given 


»f  h> 

SL   ' 


on  page  107  and  apply  them  to  the  following  list: 

Form  1.    Invoice  of  Turner  &  Moss,  (.'ity,  May  '2.    Terms  :  cash. 

^^  ,"*10  doz.  Carpenter's  Chisels    .       20  sets  Knives  and  Forks 
£,  I  .—  12  Family  Scales  -i  do/.  .Mortise  Locks 

•  10  Grindstones  1  do/.  Planes,  #-i 

3  doz.~llan.dsa\vs 

Form  2.    Bill  of  H.  L.  Mills,  City,  May  4.    Terms  :   cash. 
Set  Office  Books,  $12  .Stationery,  $3 

Form  3.    Invoice  of  Wilder  &  Chase,  City,  May  7.     Terms  :   1/2  in  3  da.. 
balance  in  10  da. 


I  — 


8  doz.  Coal  Hods 
12  doz.  Door  Knobs 
f      15  doz.  Hammers 
10  Ice-cream  Freezers 


w  — 
'££, 


~)  do/.  Lanterns  /V  •• 

10  kegs  Nails  <?  V« 

2  do/.  Planes,  #1  "?. 

.j  do/.  Carpenter's  Clusels  ^|, 


''Form  4.    Invoice  of  Dunn  &  Sanford,  City,  May  9.    Terms  :   10  da. 


~~         10  doz.  Railroad  Picks 
6  doz.  Meat  Choppers 


12  do/.  Steel  Axes  » 

20  doz.  Try-squares 


FOR  MAY  AND  JUNE 


11 

12 

13 

14 

15 

16 

17 

18 

19 

20        21 

22 

23        24        25 

5.27 

5.42 

5.25 

5.28 

5.23 

5.30 

5.42 

5.45 

5.38 

5.50     5.40,   5.44 

5.32     5.43     5.40 

5.81 

5.80 

5.88 

5.77 

5.79 

5.80 

5.83 

5.85 

5.90 

5.90     5.88 

5.90 

5.85     5.75     5.70 

1.14 

1.12 

1.16 

1.10 

1. 

1.13 

1.09 

1.12 

1.15 

1.07 

1.04 

1. 

1.10     1.06     1.05 

2.11 

2.13 

2.23 

2.15 

2.10 

2.20 

2.18 

2.15 

2.22 

2.2'i 

2.24 

2.16 

2.18     2.21'   2.25 

1.25 

1.29 

1.33 

1.35 

1.34 

1.30 

1.40 

1.30 

1.38|    1.28 

1.32'    1.29 

1.30     1.35     1.37 

12.10 

12.15 

12.09 

12.06 

12.12 

12.10 

12.18 

12.20 

12.25 

12.35  12.40 

1  12.25 

12.20  12.10  12. 

23.92 

23.97 

24.02 

24. 

25. 

24.20 

24.22 

23.90123.05 

23.80  24. 

'23.85 

23.1)0  24.10  23.95 

3.24 

3.25 

3.23 

3.32 

3.35 

3.20 

3.24 

3.28 

3.26 

3.18 

3.15 

3.20 

3.25'   3.22     3.24 

4.92 

4.88 

5. 

5.02 

5.05 

5.01 

4.80 

4.85 

4.92 

4.90 

4.95 

;   4.98 

4.75    4.80    4.70 

10.10 

10.25 

10.40 

10.35 

10.32 

10.30 

10.22 

10.26 

10.21 

10.75  10.65 

10.60 

10.55  10.70  10.72 

16.01 

16.05 

16.09 

16.13 

16.17 

16.22 

16.27 

16.32 

16.37 

16.42  16.02 

10.00 

16.10,16.14  16.18 

8.14 

8.12 

8.16 

8.31 

8.33 

8.15 

8.20 

8.22 

8.18 

8.20'    8.22:    8.05 

8.10;    8.         8.0-2 

4.06 

4.10 

4.12 

4.07 

4.02 

4.09 

4.11 

4.15 

4.13 

4.22     4.15 

4.30 

4.28     4.10    4.05 

28. 

31.50 

32.10 

31.75 

31.10 

31.40 

31.30 

31.35 

31.25 

31.  32  '31.  05 

30.75 

30.80!30.!I5  :-Jl. 

13.30 

13.25 

13.45 

13.30 

13.15 

13.06 

13.09 

13.12 

12.95 

]3.02  13.07 

13.09 

13.20  '13.25  13.30 

15.30 

16.40 

15.50 

16.60 

16. 

15.90 

15.95 

15.75 

15.60 
3.35 

15.75 

15.60 

15.55 

16.10.16.05  16. 

i  .      - 

3.40 

3.28 

3.33 

3.32 

3.37 

3.39 

3.31 

3.24 

3.32 

3.27 

3.31 

3.25'   3.30    3.20 

i           i 

132  PRINCIPLES  OF  BOOKKEEPING 

Form    5.    Check   of  Strong   &    Hunter,   City,   for   8130.20,    in    your   favor, 

May  11. 
Form    6.  Invoice  of  Turner  &  Moss,  City,  May  14.    Terms  :  on  account. 

**  °     12  doz.  Carpenter's  Chisels          -^f.—    6  doz.  Hammers 

10  doz.  Coal  Hods  /  $**•  ~   Q  Ice-cream  Freezers  /f>  _, 

A'7i~"    30  Family  Scales  /*>$.        6  doz.  Handsaws          /  7  V 

20  doz.  Door  Knobs  40  Grindstones 

^  se*"s  Knives  aud  Forks 


Form    7.  Invoice  of  Wilder  &  Chase,  City,  May  16.    Terms  :  on  account. 

g  0.   —  10  doz.  Lanterns  Jj,   —  10  kegs  Nails  f  7tg 

3  L-  6  doz.  Mortise  Locks  /  **+•   ^     6  doz.  Planes,  $4    2  ?  a.9  ~~ 

/  ?  4,  —, <- 

Form    8.  Invoice  of  Dunn  &  Sanford,  City,  May  20.    Terms  :  1/30.     \ 

/  O-o  .    -  10  doz.  Railroad  Picks  7^  .  —    6  doz.  Steel  Axes       172.* 
7,2-__               6  doz.  Meat  Choppers             _.3  s".-    10  doz.  Try-squares  ^4  f»~~ 

t~*  *  —  ^??-  -S^ 

NOTE.    The  terms  given  mean  that  1%  will  be  taken  off  the  face  of  the  invoice 

if  it  is  paid  within  30  da. 

Form    9.  Check  of  Strong  &  Hunter,  City,  for  $150,  in  your  favor,  May  23. 
Form  10.  Check  of  John  H.  Sand,  City,  for  §200,  in  your  favor,  May  30. 

Opening  the  Set.    Observe  these  general  directions: 

1.  The  same  bound  books  are  used  as  in  Set  III. 

2.  Student  and  James  A.  Hart  are  represented  as  proprietors. 

3.  The  firm  name  is  to  be  Student  &  Hart. 

4.  Student  will  keep  the  books  and  manage  the  business. 

5.  Begin  a  new  page  in  the  cashbook,  the  journal,  the  check  book, 
and  the  sales  book. 

6.  Unless   otherwise   stated,  all  payments  are  to  be  made  by  check. 
Use  a  new  sheet  for  the  bank  account. 

7.  In   the   month   of  May,   omit  the   use   of  the  Discount  on  Sales 
column  and  the  Discount  on  Purchases  column  in  the  cashbook.    These 
columns  will  not  be  used  until  the  month  of  June. 

MEMORANDA  OF  TRANSACTIONS  FOR  MAY 

May  1.  Student  and  James  A.  Hart  begin  a  General  Hardware  busi- 
ness, investing  cash,  $3000.    Each  partner  invests  $1500. 

Place  the  above  memorandum  in  the  journal,  but  make  no  journal  entry.    Receive 
the  currency  from  the  instructor. 

Refer  to  the  model  cashbook,  and  make  the  entry  for  each  partner. 

1.  Deposit  all  currency  in  The  Union  Bank,  under  the  firm  name. 
In  the  pass  book,  above  the  student's  name,  write  the  firm  name,  Student  &  Hart. 


SET  IV.    GENERAL  HARDWARE   BUSINESS  133 

May  1.  You  have  entered  into  an  agreement  with  Wm.  H.  Kellogg 
for  the  rental  of  his  store,  266  Broad  St.,  at  $50  per  month. 

No  entry  is  required.    A  memorandum  of  this  agreement  may  be  made  and  filed 
with  the  incoming  papers. 

Engage  Henry  Lakey  as  a  clerk  at  $35  per  month. 
2.  Buy  of  Turner  &  Moss,  City,  for  cash,  merchandise  as  per  invoice, 
Form  1. 

This  check  will  be  No.  1.    Now  that  yon  are  engaged  in  a  partnership  business, 
checks  are  to  be  signed  with  ihejirm  name. 

;-^L^Give  Wm.  H.  Kellogg  a  check  for  rent  of  the  store  for  May. 

4.  Buy  of  H.  L.  Mills,  City,  for  cash,  books  and  stationery,  as  per 
bill,  Form  2. 

Remember  that  all  cash  payments  are  made  by  check  unless  otherwise  noted. 

5.  W..  D.  Mendon,  City,  places   an   order  for  the  following  goods. 
Fill  the  order  at  the  prices  given  herewith.    Terms  :  cash. 

-   4doz.  Carpenter's  Chisels  at  $5.25         1  doz.  Handsaws  at  $24 
'J.Jl  tf  6  Family  Scales  at  $2.20  5  sets  Knives  and  Forks  at  $4.80 

j^r—  d  Grindstones  at  $1.25  2  doz.  Mortise  Locks  at  $8 

Record  the  invoice  in  the  sales  book  and  the  cashbook.    Begin  a  new  page  in 
the  sales  book. 

Receipt  the  invoice  and  receive  the  currency. 

6._  Hall  &  Son,  City,  place  an  order  for  the  following  goods.    Fill 
the  order.    Terms  :  on  account. 


3  doz.  Carpenter's  Chisels  <V,  ify       ^  $  sets  Knives  and  Forks 
1  doz.  Planes,  #4  2  ?.  -         Zi  H  Family  Scales 

*t     *t^i    't 

7.  Buy  of  Wilder  &  Chase,  City,  merchandise  as  per  invoice,  Form  3. 
Terms:  1/2  in  3  da.  ;  balance  in  10  da. 

7.  Deposit  currency,  $100. 

8.  Strong  &  Hunter,  City,  place  an  order  for  the  following  goods. 
Fill  the  order  at  the  prices  given  herewith.    Terms:  on  account. 

3..Z  &  4  doz.  Coal  Hods  at  $5.80  -  5  doz.  Hammers  at  $12 

3  kegs  Nails  at  $4.10  *Y  >  3  Ice-cream  Freezers  at  $8.10 

•_**"-    5  doz.  Door  Knobs  at  $1   ...~-~~*J^  '  '2  doz.  Lanterns  at  $10.20 

o  j-»  ^7-77) 

9.  Buy   of   Dunn  &   Sanford,   City,    at  10  da.,    merchandise    as   per 
invoice,  Form  4. 

9,   Withdraw  by  check  $15,  to  be  used  for  office  expenses. 

"Write  this  check  to  the  order  of  Cash.  No  entry  is  required  because  no  cash  has 
been  paid  out.  Place  the  currency  in  the  Business  Cash  envelope.  This  is  called  a 
cash  check. 


134  PRINCIPLES  OF  BOOKKEEPING 

May  10.   Remit  to  Wilder  &  Chase  a  check  for  one  half  the  invoice 

If  there  is  a  half  cent  in  the  division,  call  it  one  cent ;  always  reckon  the  odd 
cent  on  the  first  transaction. 

10.  Pay  S.  H.  Lyman,  in  currency,  $5  for  office  stationery. 

11.  Receive  of  Strong  &  Hunter  their  check  for  the  invoice  of  May  8, 
v  oim  o. 

Examine  the  check;  if  correct,  enter  the  amount  in  the  cashbook.    Place  the 
check  in  the  Business  Cash  envelope. 

12.  Give  each  partner  a  check  for  $50,  for  his  personal  use. 

Write  your  check  as  follows :  Pay  to  the  order  of  Student. 

Make  your  partner's  check  payable  to  his  own  name. 

Sign  each  check  with  ihejirm  name,  as  usual. 

Enter  in  the  cashbook  as  payments,  under  each  partner's  name,  Drawing  account. 

Place  the  currency  in  the  Personal  Cash  envelope. 


The  Drawing  Account.  Why  Used.  This  account  does  not  represent 
any  part  of  the  investment  of  a  business,  but  the  dealings  of  the  busi- 
ness with  the  individual  members  of  the  firm ;  for  this  reason  they  are 
kept  separate  from  the  investment,  or  capital,  of  the  firm. 

The  investment,  or  capital,  account  is  to  be  used  in  carrying  on  the 
business,  and  it  is  not  to  be  disturbed  except  by  agreement  of  the 
partners  and  the  amendment  of  the  articles  of  partnership. 

In  this  set  the  following  items  are  entered  into  the  drawing  accounts : 

DEBITS  CREDITS 

1.  Cash  withdrawn  by  a  partner  for      1.  Proper  share  of  any  net  profits  of 

private  use  the  business 

2.  Proper   share   of   any  net   losses 

when  the  books  are  closed  '  •*•    » ' 


._  May  13.  L.  P.  Austin,  City,  places  an  order  for  the  following  goods. 
Fill  the~  order.    Terms :  on  account.  j  7 ' 

5  doz.  Railroad  Picks  6,?,-*      •  #*  B  doz.  Try-squares    /  4  H'9   • 
2  doz.  Meat  Choppers  jf A,  MJU  '      5  doz.  Hammers 
/$•,/{;     6  doz.  Steel  Axes         cy  V,jLp_     "  3  Ice-cream  Freezers 

14.  Buy  of  Turner  &  Moss7  City,  on  account,  -merchandise 
invoice,  Form  6. 

15.  Deposit  the  check  on  hand. 


SET  IV.    GENERAL  HARDWARE   BUSINESS        •       135 

May  15.   Wilson  &  Barton,  City,  place  an  order  for  the  following 
goods:    Fill  the  order.    Terms:   10  da. 

/  £  /  10  doz.  Door  Knobs  X  Lee-cream  Freezers 


1  >*~£      3  doz.  Hammers  »i  sets  Knives  and  Forks 

2  doz.  Handsaws  4  doz.  Carpenter's  Chisels  2  <•  7  i 

'  f  ~  " 
—  -J6L_Buy  of  Wilder  &  Chase,  City,  on  account,  merchandise  as  per  ' 

invoice,  Form  7. 

17.  Remit  to  Wilder  &  Chase  a  check  for  the  balance  of  the  invoice 


Note  the  amount,  paid  on  this  invoice  on  May  10. 

18.  John  Howe,  City,  places  an  order  for  the  following  goods.    Fill 
the  order  at  the  prices  given  herewith.    Terms:  cash. 

4  doz.  Lanterns  at  $10.20  5  kegs  Nails  at  $4.10 

._£*&-.  ."•      3. doz.  Mortise  Locks  at  $8    '  3  doz.  Planes,  #4,  at  $30 

$  *    y  f  .  " IJ  /  /  5  •   - 

19.  Strong  &  Hunter,  City,  place  an  order  for  the  following  goods.       ^ 
Fill  the  orderT    Terms:  on  account. 

JF'^"     6  doz.  Carpenter's  Chisels,,  8  doz.  Door  Knobs 

J-,*<?      4  doz.  Coal  Hods  4  Grindstones 

ff~  *    •'  ** 

•2  •  0  »     10  Family  Scales         A  &.  V  {  3  doz.  Hammers 

•5  3  fftj      3  doz.  Handsaws  5  sets  Knives  and  Forks 

'  »/  5*  fe  S 

;£#.  Buy   of  Dunn    &    Sanford,    City,    merchandise    as    per   invoice, 

FornTs.    Terms:  1/30. 

What  does  Terms :  1/30  mean  1 

21.^  Receive  of  L.  P.  Austin  cash,  on  the  invoice  sold  to  him  on 
May  13,  $100. 

22.  John  H.  Sand,  City,  places  an  order  for  the  following  goods. 
Fill  the  order.  Terms :  on  account. 

6  doz.  Railroad  Picksf^ya         *•'•*"  5  kegs  Nails 

5  doz.  Meat  Choppers?//!^*         •%•**- 5  Ice-cream  Freezers         '  ^ 
10  doz.  Try-squares      J.2/&J       /  0 Mtrk  doz.  Lanterns  H    3  f 


tt3S"      3  Grindstones  %&£       5^f  6  doz.  Carpenter's  "Chisels^ 

^ 


23.  Receive  of  Strong  &  Hunter  their  check  for  $150,  to  apply  on 
the  invoice  of  May  19,  Form  9. 

sposit  the  check  on  hand,  and  currency,  $200. 

24.  Remit  to  Dunn  &  Sanford  a  check  for  the  amount  of  the  invoice 
bought  of  them  on  May  9. 

_  -2$.  Receive  of  Wilson  &  Barton  cash  for  the  amount  of  the  invoice 
sold  to  them  on  May  15. 


136  PRINCIPLES  OF  BOOKKEEPING 

May  26.   Give  Wilder  &  Chase  your  note  at  15  da.,  with  interest, 
— for  the  invoice  of  May  16. 

Write  the  note  and  make  the  journal  entry.  The  invoice  should  be  receipted  as 
follows  :  Paid  by  note  at  15  da.,  Wilder  $•  Chase. 

What  should  be  done  with  the  invoice  after  it  has  been  receipted  ?  Who  receipts 
this  invoice? 

27.  P.  D.  Anson,  City,  places  an  order  for  the  following  goods.    Fill 

the  order.    Terms :  10  da. 

5~C*4" 

*          t?jo         3  doz.  Coal  Hods  /+?^~,  5  Grindstones          *•*•*""  ^-^ 

.?&.<?  o       10  Family  Scales  '«?.j-o  2  doz.  Hammers    **• -LL* 

4:  doz.  Door  Knobs  ~sfc  *€)  1  doz.  Handsaws, 


Turner  &  Moss  a  check  for  one  half  of  the  invoice  bought 
of  them  on  May  14.        '  *  *•  ^ 

28.  Receive  of  Hall  &  Son  cash,  to  apply  on  the  invoice  sold  to  them 
on  May  6,  $50. 

29.  L.  P.  Austin,  City,  places  an  order  for  the  following  goods.    Fill 
the  order  at  the  prices  given  herewith.    Terms:  3/10,  n/30. 

/^  .2.  o      4  sets  Knives  and  Forks  at  $4.80  J*.  ~3  doz.  Mortise  Locks  at  $8 
3  *  '  *  °  _  3  doz.  Lanterns  at  $10.20  .   """h  kegs  Nails  at  $4.10 

f-f  ft    &~&  *?  Or* 

^^-^^TTiie  terms  3/10,  n/30  mean  that  3%  will  be  taken  off  the  face  of  the  invoice 
if  it  is  paid  within  ten  days,  but  if  paid  after  the  ten  days,  then  the  face  of  the 
invoice  must  be  paid.  n/30  means  net  30  da.  This  is  a  common  and  very  con- 
venient form  of  abbreviation.  If  the  invoice  is  not  paid  by  the  purchaser  until 
after  the  lapse  of  the  10  da.,  then  the  limit  of  time  for  payment  is  30  da.,  and  the 
face  of  the  invoice  is  to  be  paid  at  settlement. 

29.  Wilson  &  Barton,  City,  place  an  order  for  the  following  goods. 
Fill  the  order.    Terms:  on  account. 

2  doz.  Planes,  #4  3Jt****~    2  doz.  Meat  Choppers 

4  doz.  Railroad  Picks  62-,  O     4  doz.  Steel  Axes  /r.^o 


30.  Receive  of  John  H.  Sand  his  check,  to  apply  on  account,  for 
1200,  Form  10. 

31.  Deposit  the  check  and  all  currency  on  hand. 

31.  Give  Henry  Lakey,  your  clerk,  a  check  for  his  salary  for  the 
month  of  May,  $35. 

Monthly  Bank  Statement.  Make  the  monthly  bank  statement  for 
May. 

Before  closing  the  different  books  hand  them  to  the  instructor  for 
inspection  and  approval. 


SET  IV.    GENERAL  HARDWARE   BUSINESS  137 

Inventories.   The  following  inventories  are  for  use  in  the  work  for  May : 

Inventories,  May  31,  19 — 
Merchandise : 

4  doz.  Carpenter's  Chisels  4  sets  Knives  and  Forks 
7  doz.  Coal  Hods  2  doz.  Lanterns 

5  doz.  Door  Knobs  3  doz.  Meat  Choppers 
12  Family  Scales  2  doz.  Mortise  Locks 

4  Grindstones  3  kegs  Xails 

3  doz.  Hammers  3  doz.  Planes,  #4 

2  doz.  Handsaws  5  doz.  Railroad  Picks 

2  Ice-cream  Freezers  8  doz.  Steel  Axes 

15  doz.  Try-squares  V7/, 

Office  Supplies : 

Office  Books  and  Stationery,  $12 

Closing  the  Work  for  May.    Close  each  book  as  in  Set  III. 
Open  accounts  in  the  ledger,  four  accounts  to  the  page,  in  the  follow- 
ing order;  begin  on  the  page  indicated  by  the  index  number: 

Cash  Accounts  Payable  r1 

Notes  Receivable  Turner  &  Moss 

Accounts  Receivable  : 1  "\Vilder  &  Chase 

W.  D.  Mendon  Dunn  &  Sanford 

Hall  &  Son  Student,  Investment 

Strong  &  Hunter  Student,  Drawing 

L.  P.  Austin  James  A.  Hart,  Investment 

Wilson  &  Barton  James  A.  Hart,  Drawing- 

John  Howe  Profit  and  Loss 

John  H.  Sand  Sundry  Expense  Inventory 

P.  D.  Anson  Merchandise  Sales 

Arnold  &  Davis  Interest  Earned 

V.  M.  Farnham  Merchandise  Discount  on  Purchases 

Henry  Zaner  Merchandise  Purchases 

Merchandise  Inventory  Salary 

Notes  Payable  Office  Supplies 

Rent  Paid 

Merchandise  Discount  on  Sales 
Interest  Paid 

Foot  the  ledger  accounts. 

Take  a  trial  balance;    after  approval,  record  it  in  Blank  No.  1,  on 
the  page  indicated  by  the  index. 

Make  the  statements;   after  approval,  record  them  in  Blank  No.  1, 
on  the  page  indicated  by  the  index. 

1  Do  not  write  Accounts  Receivable  nor  Accounts  Payable  in  your  ledger. 


138 


PRINCIPLES  OF  BOOKKEEPING 


When  Drawing  accounts  are  kept  with  the  partners,  it  i.s  necessary  to  modify  the 
form  of  that  part  of  the  balance  sheet  or  financial  statement  which  pertains  to  the 
proprietary  interest ;  the  other  part  of  the  statement  remains  unchanged. 

Use  the  following  form  : 

Proprietary  Interest : 

Student,  Investment  $1000 

Drawing : 

Profit  and  Loss  $120 

Withdrawal  50  70     $1070 


James  A.  Hart,  Investment 
Drawing : 

Profit  and  Loss 
Withdrawal 


$1000 


$120 
50 


70     $1070 


The  above  statement  sets  forth  each  partner's  individual  interest  in  the  business 
at  the  time  the  books  are  closed. 

Make  the  necessary  journal  entries  and  postings  to  close  the  ledger. 

Divide  the  net  profit  equally  between  the  partners,  according  to  agreement.  The 
following  suggests  the  journal  entry  for  closing  the  Profit  and  Loss  account: 

Profit  and  Loss 

Student,  Drawing 

James  A.  Hart,  Drawing 
To  divide  the  balance   of  the   Profit  and 
Loss  account,  representing  the  net  profit  of 
the  period,  between  the  partners  in  the  agreed 
proportion. 

After  posting  the  above  entry,  balance  the  Drawing  account  of 
each  partner. 

Take  a  second  trial  balance. 

Submit  all  work  to  the  instructor  for  approval. 

After  receiving  the  monthly  bank  statement,  check  the  stubs  of 
the  check  book. 

Exercise  39.    Review 
For  Written  Work 

1.  Journalize   orally  or  in  writing   each  transaction   in  Set  IV  for 
May. 

2.  On   sheets   of  journal   and    ledger   paper  write    Set  I,  page   59, 
as  follows :  enter  all  cash  items  in  the  cashbook ;  journalize  all  other 
items ;  post  to  the   ledger,   four   accounts   to  the   page ;    take   a  trial 
balance ;  make  the  usual  statements ;  close  the  ledger ;  take  a  second 
trial  balance. 


SET  IV.    GENERAL  HARDWARE  151/SLNESS 

Exercise  40.    Review 

For  Written  W<>rL- 


13V 


1.  Make  the  statements  from  the  following  trial  balance.    Date  the 
statements  March  31,  19 — . 


Cash 

Notes  Receivable 

lies  &  Son 

H.  R.  Eaton 

Arthur  Lessing 

Mdse.  Inventory 

Office  Furniture 

Real  Estate 

Building  and  Fixtures 

Notes  Payable 

Kittredge  &  Co. 

H.  D.  Greene 

E.  M.  Baker 

John  S.  Graves,  Investment 

John  S.  Graves,  Drawing 

David  Freeman,  Investment 

David  Freeman,  Drawing 

Mdse.  Sales 

Interest  Earned 

Mdse.  Purchases 

Rent  Paid 

Office  Supplies 

Interest  Paid 

Inventories,  March  31 : 

Merchandise 
Office  Supplies 
Office  Furniture 
Real  Estate 
Building  and  Fixtures 


$671.55 
534.75 
194.65 
114.85 
265.20 

1100. 
145.20 

1200. 

1515.75 


100. 


$356.70 

77.50 

108.95 

45.80 

4200. 

4200. 

5421.50 
16.20 


8381.55 
65.50 
38.90 
23.75 


$14426.65         $14426. 65 

$4562.70 

12.50 

145.20 

1200. 

1515.75 


2.  Use  the  work  for  May  in  the  books  for  Set  IV,  in  the  following 
exercises : 

a.  Analyze  each  ledger  account. 

b.  Analyze  each  cashbook  entry. 

c.  Journalize  orally  each  purchase-book  entry. 

d.  Journalize  orally  each  sales-book  entry. 

e.  Distinguish   between    the    Drawing   account    and    the    Investment 
account. 


140 


PRINCIPLES  OF  BOOKKEEPING 


3.  a.  On  a  sheet  of  ledger  paper  copy  the  following  ledger  accounts, 
allowing  eight  lines  for  each  account : 


MERCHANDISE  INVENTORY 


19— 

May 

1 

4 

725 

Student,  PROPRIETOR 


19— 

May 

1 

2 

1400 

Student,  DRAWING 


19— 

May 

19 

5 

60 

HENRY  SEARLE,  INVESTMENT 


19— 

May  , 

1 

2 

1400 

HENRY  SEARLE,  DRAWING 


19— 

May 

15 

5 

50 

SET  IV.    GENERAL  HARDWARE  BUSINESS  141 

MERCHANDISE  SALES 


INTEREST  EARNP:D 


lo 


MERCHANDISE  PURCHASES 


OFFICE  SUPPLIES 


INTEREST  PAID 


19— 

May 

31 

7 

1749 

45 

19— 

May 

10 

5 

12 

75 

19— 

May 

13 

4 

8 

50 

Inve 

ntoi 
Me 

Offi 

ies,  May  81  : 
rchandise 
ce  Supplies 

|735.20 
6.25 

b.  Open  the  following  accounts :  Profit  and  Loss  and  Sundry  Expense 
Inventory. 

c.  Make  the  necessary  entries  and  postings  to  close  the  above  ledger. 


CHAPTER  XI 

SET  IV.    GENERAL  HARDWARE  BUSINESS  (CONTINUED) 
WORK   FOR  JUNE 

The  memoranda  of  this  month  are  a  continuation  of  the  memoranda 
for  May,  representing  a  partnership  business. 

Incoming  Business  Forms  for  June.  The  following  list  is  a  continua- 
tion of  the  Incoming  Business  Forms  for  May  011  pages  131  and  132: 

Form  11.    Invoice  of  Wilder  &  Chase,  City,  June  3.    Terms :  2/10,  n/30. 

/  g  6  doz.  Carpenter's  Chisels  5  doz.  Hammers 

'    /    x          10  doz.  Door  Knobs  (3  doz.  Handsaws 

(J  6  Grindstones 

Form  12.    Invoice  of  Dunn  &  Sanford,  City,  June  5.    Terms  :  on  account 
i;  _          -  /  s  , 

f  a /\  ^  Ice-cream  Freezers  (*,      10  doz.  Mortise  Locks      *  *^. 

^.f$  12  sets  Knives  and  Forks  ^  2-o   20  kegs  Nails  C  Y.  -^, 

',         ~>        cV  10  doz.  Lanterns  ^**4~     6  doz.  Planes,  #4         '^H 

<-*  '         Form  13.    Check  of  Arnold  &  Davis,  City,  for  $100,  in  your  favor,  June  5. 

Form  14.    Note  of  P.  D.  Anson,  City,  for  $100,  in  your  favor,  at  10  da., 

with  interest,  June  6. 
Form  15.    Bill  of  H-  L.  Mills,  City,  June  9.    Terms  :  cash. 

Office  Stationery,  $6.75 

Form  16.    Invoice  of  Turner  &  Moss,   City,  June  12.    Terms :    1/2  cash ; 
balance  in  30  da. 

10  doz.  Carpenter's  Chisels  6  Grindstones 

5  doz.  Coal  Hods  6  doz.  Hammers 
12  Family  Scales  5  doz.  Handsaws 

6  doz.  Door  Knobs 

Form  17.    Check  of  L.  P.  Austin,  City,  for  $73.85,  in  your  favor,  June  14. 
Form  18.    Invoice  of   Wilder  &  Chase,  City,  June  15.    Terms:    1/2  cash; 
balance  in  30  da. 

6  Ice-cream  Freezers  12  doz.  Mortise  Locks 
10  sets  Knives  and  Forks  20  kegs  Nails 

6  doz.  Lanterns  5  doz.  Planes,  #4 

142 


SET  IV.    GENERAL  HARDWAKE   BUSINESS  143 

Form  19.    Invoice  of  Turner  &  Moss,  City,   -June  21.     Terms:    1/2  cash; 
balance  in  10  da. 

12  doz.  Railroad  Picks  (i  do/.  Steel  Axes 

8  doz.  Meat  Choppers  10  do/.  Try-squares 

Form  20.    Check  of  P.  1).  Anson,  City,  for  $100,  in  your  favor,  June  25. 

' 

Opening  the  Work  for  June.     The  following  general  directions  should 
be  observed : 

1.  Use  the  same  price  list  and  the  same  books  as  in  May. 

2.  Begin  a  new  page  in  the  journal.    In  the  sales  book,  leave  a  space 
of  three   lines,  then  write   the  first  sale  in  June   under  the   last  sale 
in  May. 

3.  The  balance  brought  down  from  the  May  cashbook,  under  June  1, 
is  to  be  reckoned  with  the  cash  receipts  in  June.    Use  a  new  sheet 
for  the  bank  account     Record  the  balance  at  the  head  of  the  deposit 
column. 

(MEMORANDA  OF  TRANSACTIONS  FOR  JUNE 
June^E\   Give  Wm.  H.  Kellogg  a  check  for  rent  of  the  store  for 
June,  $50. 

\j£s  Receive  of  Hall  &  Son  cash  for  the  balance   of   the   invoice   of 
May  6. 
x~*^^^ive  Turner  &  Moss  your  note  at  15  da.  for  the  balance  of  the 

invoice  of  May  14. 
^*  C:D  Buy    of    Wilder    &    Chase,    City,    merchandise    as    per    invoice, 

Form  11.    Terms :   2/10,  n/30. 
^4^4%)  Hall  &  Son,  City,  place  an  order  for  the  following  goods.    Fill 

* 

the  order.    Terms:   30  da. 

4  doz.  Coal  Hods  *3  -^o  $~.t$     3  doz.  Carpenter's  Chisels //j$Y 

4  Family  Scales      9«3  *-  '  *  •  ^°    3  doz.  Hammers  »  ?•  i  u 

3  doz.  Handsaws  t^JLJL.  ?.<*.  F    5  doz.  Try-squares  ^     -— 

/  0  1        j  L   i  ttH- 

of  Dunn  &  Sanford,  City,  on  account,  merchandise  as  per 
invoice,  Form  12. 

\J$  Arnold  &  Davis,  City,  place  an  order  for  the  following  goods. 
Fill  the  order  at  the  prices  given  herewith.  Terms:  caslv*|100; 
balance  in  15  da. 

3  Ice-cream  Freezers  at  $3.10  1.3O  5  doz.  Lanterns  at  $10.20  £*•  J° 
3  doz.  Try-squares  at  $3.20  ^-co  6  doz.  Mortise  Locks  at  .$8  *  ?.  - 
8  sets  Knives  and  Forks  at  $4.8<L**-  2  doz.  Planes,  #4,  at  $30 

***  '     **      f « 

Enter  in  the  sales  book.    Receive  their  check  for  $100,  Form  13,  and  enter  it  in    -^    '^ 

the  cashbook.    Under  what  name  is  the  check  entered? 

<  '    *,.  J 


144  PRINCIPLES  OF  BOOKKEEPING 


\  Jund\tF\ Receive  of  L.  P.  Austin  cash  for  the  balance  of  the  invoice 
of  Mayld. 

\6j  Receive  of  P.  D.  Anson  his  note  at  10  da.,  with  interest,  Form  14. 
Do  not  make  any  entry  for  the  interest. 

Receive  of  Strong  &  Hunter  cash  for  the  balance  of  the  invoice 

y  19. 

.  Deposit  the  check  on  hand,  and  currency,  $200. 
)  Receive  of  L.  P.  Austin  cash  for  the  invoice  of  May  29,  less  3%. 

The  allowance  of  3%  on  this  invoice  for  early  payment  is  called  merchandise 
discount.  Such  allowances  are  common  in  business.  Study  with  care  the  following 
discussion  of  merchandise  discount. 


Merchandise  Discount.  If  certain  definite  terms  are -noted  on  an  in- 
voice, as  3/10,  n/30,  and  the  buyer  takes  advantage  of  the  terms  which 
allow  a  discount,  such  allowance  is  termed  merchandise  discount.  If  the 
terms  are  cash  less  some  specified  discount,  the  allowance  may  be  treated 
just  the  same  as  when  a  certain  number  of  days  are  named,  as  3/10 ; 
this  method  is  followed  in  this  text. 

If  the  discount  is  made  on  a  purchase,  then  the  name  of  the  allow- 
ance is  Merchandise  Discount  on  Purchases ;  if  on  a  sale,  Merchandise 
Discount  on  Sales. 

In  this  text  no  discounts  are  deducted  on  the  face  of  the  invoice ; 
all  invoices  will  be  entered  at  the  face  value  in  the  regular  books  of 
record,  and  all  discounts  on  the  invoices  will  be  recorded  in  the  cash- 
book  and  posted  to  the  ledger. 

Refer  to  the  model  cashbook  for  May. 

It  is  very  convenient  to  write  dates  in  fractional  form.  5/29  means 
the  5th  month  and  the  29th  day,  —  May  29.  - 

The  ability  of  a  business  man  to  take  advantage  of  the  discounts  offered  on 
goods  purchased  is  often  an  important  or  even  a  determining  factor  in  his  busi- 
ness success ;  the  fact  that  he  is  able  to  pay  for  his  goods  within  the  discount 
period  gains  financial  credit  for  him. 


^  June(J£  Give  Dunn  &  Sanford  a  check  for  the  invoice  of  May  20, 
less  1%. 

Pay  the  bill  of  H.  L.  Mills,  by  check,  for  office  stationery,  Form  15. 

Give  Wilder  &  Chase  a  check  for  your  note,  in  their  favor,  due 
to-day,  with  interest. 


SET  IV.    GENERAL  HARDWARE  BUSINESS  145 

June  (jj.   Strong  &  Hunter,  City,  place  an  order  for  the  following 
goods.    Fill  the  order.     Terms :  15  da. 

/.07      5  dQz.  Door  KuobsS.J*'      AS-**      2  do/.  Handsaws      v~.fo 
f.JS     3  Grindstones         *  ••*'       >+' • «"        6  ke^s  Nails  a*.  t» 

4  v  <->~^'  n  »•»•'**' 

r  *-•>*>      2  doz.  Hammers  3  *  '       4  doz.  Try-squares    '  *-  'J-? 

J'f"  V'f^ 

({j]j}  Buy  of  Turner  &  Moss,  City,  merchandise  as  per  invoice,  Form  16. 

Terms:  1/2  cash;  balance  in  30  da. 

Enter  the  entire  amount  in  the  purchase  book.     Remember  the  check  for  the 
cash  payment. 


Give  Wilder  &  Chase  a  check  for  the  amount  of  the  invoice  of 
June  3,  less  2%. 
&3\  Give  each  partner  a  check"  for  $50,  for  personal  use. 

Sign  each  check  with  the  firm  name. 

To  what  account  are  these  amounts  to  be  posted  ? 

(^)  L.  P.  Austin,  City,  places  an  order  for  the  following  goods.  Fill 
the  order  at  the  prices  given  herewith.  Terms :  1/2  cash ;  balance 
in  30  da. 

j.  /.  -  -    4  doz.  Carpenter's  Chisels  at  $5.25  ^  „  2  Grindstones  at  §1.25 

A/.  *"    6  Family  Scales  at  $2.20  *  -•  ^  3  doz.  Hammers  at  S12     ,  <f 

-57  3u.eT3  doz.  Door  Knobs  at  $1  3  doz.  Handsaws  at  $24 

/ f  f,±  o 

J  i.  i* 

Receive  a  check  for  one  half  the  amount,  Form  17. 

(q^3Buy  ~of\Wilder   &    Chase,    City,    merchandise    as    per    invoice, 
Form'18.    Terms:  1/2  cash;  balance  in  30  da. 
/?^  Receive  of  P.  D.  Anson  cash  for  his  note  and  interest  due  to-day. 

Compute  the  interest  on  the  note  and  receive  the  currency.  Remember,  there  are 
two  entries  in  the  cashbook.  What  titles  will  be  used?  How  is  this  note  to  be 
canceled  ? 

16.  Deposit  the  check  on  hand,  and  currency,  $200. 
(T).  Give  Turner   &   Moss   a  check   for  your  note,   in   their   favor, 
due  to-day. 

GW  V.  M.  Farnham,  City,  places  an  order  for  ^e  following  goods. 
Fill  the  order  at  the  prices  given  herewith.  Terms :  cash. 

2*1.  £  i>     6  kegs  Nails  at  $4.10  2  doz.  Railroad  Picks  at  812.50 

(%fc  Receive  of  Arnold  &  Davis  cash  for  the  balance  of  the  invoice 
ofJ|me  5. 

%|rBuy bf  Turner  &  Moss,  City,  merchandise  as  per  invoice,  Form  19. 
Terms :  1/2  cash ;  balance  in  10  da. 


146  PRINCIPLES  OF  BOOKKEEPING 

June  @£\   Wilson  &  Bartorl^xCity,  place  an  order  for  the  following 
goods.    Ftil  the  order.    Terms:  cash,  875:  balance  in  10  da. 

•f  0  »J>9       5  doz.  Carpenter's  Chisels        •',••  •'  5  Grindstones    £t?  $' 

-76  s:«c>    3  doz.  Coal  Hods  '<A»«  3  doz.  Hammers3?.*tt 

.•31-  1*1      4  doz.  Door  Knobs  J  ?+*  2  doz.  Handsaws***-5^ 


22.  Deposit  currency,  $175.  **  7t& 

^f^Give  Dunn  &  Sanford  your  note  at  30  da.,  to  aprTl^W  -account, 


John  H.   Sand,  City,  places  an  order  for  the  following  goods. 
Fill  the  order.     Terms:  cash,  $150;  balance  in  30  da. 


<f  ^  3fS  2-     6  Ice-cream  Freezers  ?t$    6  doz.  Mortise  Locks 

f  I  1.T-L.  8  sets  Knives  and  Forks         ^o'lO  kegs  Nails 

^_  /«,fr    5  doz.  Lanterns  J?j?       3  doz.  Planes,  #4 

.r*~ 

*J)  P.  D.   Anson,   City,  places   an   order  for  the  following  goods. 
Fill  the  order.    Terms:  cash,  $100;  balance  in  10  da. 


'  *«*•     5  doz.  Railroad  Picks  >7f6   4  doz.  Steel  Axes  ^  3  3  o 

'^•z-'      5  doz.  Meat  Choppers  j^^P    3  doz.  Try-squares  ^  g  <»_ 

>*  ^^ 

Receive  his  check  for  $100,  Form  20.  _£*^-«-C* 

x  t  f  £^~~    I 

(^jXp  Receive  of  Strong  &  Hunter  cash  for  the  invoice  of  June  11.  V 
—  £&^  Deposit  the  check  on  hand,  and  currency,  $250. 
C^T^  Strong  &  Hunter,  City,  place  an  order  for  the  following  goods. 
Fill  the  order.    Terms:  10  da.  ^ 


3  doz.  Railroad  Picks  ?.*      4  doz.  Try-squares 

10  kegs  Nails  '  *".  7v    2  doz.  Steel  Axes 

.,  Henry   Zaner,   City,  places  an   order  for  the   following  goods. 
Fill  the  order  at  the  price  given  herewith.     Terms:  caslu 

6  kegs  Nails  at  $4.10 


JO.1  Prepay  your  note  in  favor  ot  Dunn  A:  Sanford,  issued  on  June  2 
by  giving  them  a  check  for  the  net  proceeds. 

This  note  has  24  da.  to  ran  ;  compute  the  interest  on  the  face  of  the  note  for 
that  time. 

Enter  in  the  cashbook  as  follows  :  under  Cash  Paid,  the  face  of  the  note  ;  under 
Cash  Received,  Interest  Earned  for  the  interest. 

Write  a  check  for  the  face  of  the  note  minus  the  discount.  Hand  in  the  check 
and  receive  the  canceled  note.  This  note  will  be  canceled  by  writing  across  the  face 
of  it  Paid  June  29,  19  —  ,  Dunn  $•  Sanford. 

Place  the  canceled  note  in  the  Paid  Bills  envelope.  This  serves  as  a  receipt  for 
the  note  which  has  been  paid. 


SET  IV.    GENERAL  HARDWARE  15CSIXESS  147 

Juneizy.  Hall  &  Son,  City,  place  an  order  for  the  following  goods. 
Fill  the  order.     Terms :  on  account. 


4  Family  Scales  Y.?  *-          *     ^      3  loe-cream  Freezers 
t?f~ 3  Grindstones      Y^i"     -2?*ft>    2  doz.  Handsaws 

^  *~~  ^»      ™*  * 

$#.  Give  Henry  Lakey,  your  clerk,  a  cheek  I'or  his   salary, 

$0.  Deposit  all  currency  on  hand. 

30.  Withdraw,  by  check,  the  balance  on  deposit  in  The  Union  Bank. 

Write  the  check  payable  to  the  order  of  Cash.    The  reasons  for  this  withdrawn 

were  given  at  the  close  of  April.    Xo  entry  is  rc<jnir«l. 

"*-*  ' 

Monthly  Bank  Statement.    Make  the  monthly  bank  statement. 
Hand  all  books  to  the  instructor  for  inspection  and  approval. 
Inventories.    Record  the  following  inventories  on  a  sheet  of  journal 
paper,  in  the  usual  form,  at  the  cost  price,  and  iile  for  future  reference : 

Inventories,  June  30,  19 — 

Merchandise : 

8  doz.  Carpenter's  Chisels  10  sets  Knives  and  Forks 

5  doz.  Coal  Hods  8  doz.  Lanterns 

9  doz.  Door  Knobs  6  doz.  Meat  Choppers 
10  Family  Scales                               12  doz.  Mortise  Locks 

3  Grindstones  5  kegs  ]STails 

3  doz.  Hammers  9  doz.  Planes,  #4 

1  doz.  Handsaws  7  doz.  Railroad  Picks 

2  Ice-cream  Freezers  8  doz.  Steel  Axes 

6  doz.  Try-squares 
Office  Supplies  : 

Books  and  Stationery,  $12.50 

Closing  the  Set.    Close  the  different  books. 

May  and  June  constitute  one  set  of  books;  therefore  the  work  for 
June  will  be  posted  to  the  same  accounts  as  that  for  May. 

Foot  the  ledger  accounts. 

Take  a  trial  balance;  after  approval,  record  it  in  Blank  No.  1,  on 
the  page  indicated  by  the  index. 

Make  the  usual  statements ;  after  approval,  record  them  in  Blank 
No.  1,  on  the  page  indicated  by  the  index. 

Make  the  necessary  journal  entries  and  postings  to  close  the  ledger. 

Submit  all  work  to  the  instructor  for  approval. 

After  receiving  your  monthly  bank  statement,  check  the  stubs  of 
the  check  book. 


148  PRINCIPLES  OF  BOOKKEEPING 

Exercise  41.    Review 

For  Written  Work 
,,    ,  .  (. 

1.  Journalize  orally  or  in  writing  each  transaction  in  June. 

2.  Journalize  orally  or  in  writing  each  transaction  in  Set  G,  pages 
ISI'W  152. 

3.  As  a  test,  write  from  memory,  on  blank  paper  cut  to  the  proper 
size,  the  following  business  forms ;  make  the  entry  for  each  party. 

a.  A  Promissory  Note.     On  May  27  Student  gives  Henry  S.  Miller 
a  30-day  promissory  note,  bearing  interest  at  6%,  payable  at  Second 
National  Bank.    Face  of  the  note,   $237.50. 

b.  A  Promissory  Note.     On  June  16  /Student  receives  of  Adam  H. 
Freeman  a  60-day  promissory  note,  without  interest,  payable  at  Union 
National  Bank.    Face  of  the  note,  $348.20. 

c.  A  Check.    On  May  15  Student  receives  of  Howard  &  Co.  a  check 
drawn  on  the  City  National  Bank  for  $88.40. 

4.  Use  the  work  for  June  in  the  books  for  Set  IV  in  the  following 
exercises : 

a.  Analyze  each  ledger  account. 

b.  Analyze  each  cashbook  entry. 

c.  Journalize  each  purchase-book  entry. 

d.  Journalize  each  sales-book  entry. 
•e.  Analyze  each  journal  entry. 

5.  On  June  16  P.  D.  Anson  settled  for  his  note  and  the  interest. 
How  did  this  settlement  affect  the  present  worth  of  the  business  ? 

6.  On  June  29  the  business  prepaid  a  note  in  favor  of  Dunn  &  San- 
ford.    Did  this  prepayment  affect  the  present  worth  ? 

7.  On  June  17  the  business  paid  a  note  in  favor  of  Turner  &  Moss. 
Did  the  payment  of  this  note  affect  the  amount  of  the  present  worth 
of  the  business  ? 

8.  What  effect  does  each  of  the  following  transactions  have  on  the 
present  worth  of  the  business  ? 

a.  A  receipt  of  money  on  account. 

b.  A  payment  of  money  on  account. 

c.  The  payment  of  a  promissory  note  at  maturity,  without  interest ; 
with  interest. 

d.  The  receipt  of  cash  for  a  promissory  note  at  maturity,  without 
interest;  with  interest. 

9.  State  the  use  of  the  Investment   account. 

10.  State  the  use  of  the  Drawing  account. 

11.  What  does  the  credit  balance  of  the  Drawing  account  show  ? 


SET  IV.    GENERAL  HARDWARE  BUSINESS  149 

Exercise  42.    Review 

For  Written  ll'ork 

1.  Make  the  statements  from  the  following  trial  balance.     Date  the 
statements  June  30,  19 — . 

Cash  $44(5. 05 

Notes  Receivable  __512J)0 

John  S.  Bright  ^  178.40 

King  &  Melton  &^  ^      131.70 

Derby  &  Co.  •  <^N    Z3J95 

Mdse.  Inventory  1020. 

Office  Furniture  128. (50 

Keal  Estate  600. 

Building  and  Fixtures  1223.05 

Notes  Payable  J$234.oO 

Wallis  &  Lace  102.15 

John  D.  Wheeler  45.75 

White  &  Son  24.50 

Geo.  M.  Blake,  Investment  2350. 

Geo.  M.  Blake,  Drawing  100. 

H.  S.  Rowen,  Investment  2350. 

H.  S.  Rowen,  Drawing  75. 

Mdse.  Sales  2473.15 

Interest  Earned  43.25 

Mdse.  Discount  on  Purchases  32.65 

Mdse.  Purchases  2985.40 

Rent  Paid  80. 

Office  Supplies  33.75 

Mdse.  Discount  on  Sales  31.35 

Interest  Paid  29.60 

$7655.95        $7(555.95 
Inventories,  June  30  : 

Merchandise  $1850.60 

Office  Furniture  128.60 

Real  Estate  600. 

Building  and  Fixtures  1223.65 

Office  Supplies  21.55 

2.  The  following  ledger  closings  are  suggested  : 

a.  Transfer  to  sheets  of  ledger  paper  the  Drannnf/  accounts  and  t la-- 
other accounts  necessary  to  close  the .  ledger,  then  make  the  necessary 
entries  and  postings  to  close  the  ledger. 

b.  Use  the  accounts  from  Exercise  40,  and  close  the  ledger. 


CHAPTER  XII 

GENERAL  REVIEW 
Exercise  43.    Suggested  Studies 

For  Discussion 
I.    PROFIT  AXD  Loss  STATEMENT 

1.  From  your  closed  ledger  for  June,  Set  IV,  state  the  amount  of 
goods  sold  for  the  month ;  the  goods  on  hand  at  the  beginning  of  the 
month ;    the  goods  purchased  for  the  month ;    the  goods  on  hand  at 
the  close  of  the  month. 

2.  How  did  you  find  the  cost  of  the  goods  sold  ? 

3.  Why  did  the  sales  for  the  month  show  a  profit  ? 

4.  What  items,  if  any,  increased  this  profit,  and  why  ? 

5.  What  items,  if  any,  decreased  the  profit,  and  why  ? 

6.  Did  the  Interest  Paid  account  increase  or  dimmish  the  profits  ? 

7.  Did  the  Interest  Earned  account  increase  or  diminish  the  profits  ? 
Why? 

8.  Did  the  Merchandise  Discount  on  Sales  increase  or  diminish  the 
profits?    Why? 

9.  Did  the  Merchandise  Discount  on  Purchases  increase  or  diminish 
the  profits?    Why? 

II.    THE  BALANCE  SHEET  OK  FINANCIAL  STATEMENT 

1.  What  is  a  balance  sheet  ? 

2.  What  is  the  purpose,  in  business,  of  making  a  balance  sheet  ? 

3.  What  are  the  three  most  important  facts  set  forth  in  the  financial 
statement  ? 

4.  How  was  the  amount  of  the  merchandise  inventory  determined? 
Why  is  it  an  asset  ? 

5.  In  your  ledger  for  June,  Set  IV,  name  each  account  that  shows 
an  asset.    Why  an  asset  ? 

6.  Name  each  account  that  shows  a  liability.    Why  a  liability  ? 

7.  If  a  debt  is  paid  in  cash,  what  is  the  effect  on  the  assets  ?    on 
the  liabilities?    on  the  present  worth? 

150 


GENERAL  REVIEW  151 

8.  If  the  assets  exceed  the  liabilities,  what  is  the  condition  of  the 
business  ? 

9.  If  the  liabilities  exceed  the  assets,  what  is  the  condition  of  the 
business  ? 

SET  (i.    GRAIX 

Directions.  The  books  used  arc  the  journal,  the  cashbook,  the  sales 
book,  the  purchase  book,  and  the  ledger.  Sheets  of  journal  paper 
and  ledger  paper  should  be  used  for  recording  the  transactions.  Allow 
one  third  of  a  page  for  each  account  in  the  ledger. 

SUGGESTION.  This  set  is  given  as  a  review  set,  or  it  may  be  used  for  additional 
work  by  those  students  who  finish  the  regular  sets  in  advance  of  the  class. 

MEMORANDA   OF   TRANSACTIONS 

June  1.  Student  and  Wm.  G.  Allston  begin  the  Grain  and  Seed  busi- 
ness, investing  cash,  §2000.  Each  partner  invests  Si 000. 

2.  Pay  Edward  S.  Green  by  check,  for  rent  of  the  store  fog  June,  $50. 

3.  Buy  of  Wm.  S.  Duncan  by  check : 

•    500  bu.  Wheat  at  $1  600  bu.  Corn  at  000 

4.  Sell  Harvey  &  Co.  for  cash: 

200  bu;  Wheat  at  $1.25  150  bu.  Corn  at  750 

5.  Buy  of  E.  S.  Harlan  on  account  : 

1000  bu.  Oats  at  480 

6.  Pay  T.  J.  Coleman  by  check,  for  a  set  of  office  books,  stationery, 
and  supplies,  $22.50. 

6.  Sell  Graves  &  Co.  on  account: 

250  bu.  Corn  at  750  400  bu.  Oats  at  600 

8.  Pay  E.  S.  Harlan. by  check,  on  account,  $200. 

9.  Buy  of  Richard  S.  Goodman  on  account : 

500  bu.  Corn  at  600 

10.  Sell  Henry  P.  Dutton  on  account : 

150  bu.  Wheat  at  $1.25  100  bu.  Corn  at  750 

200  bu.  Oats  at  600 

11.  Buy  of  S.  M.  Collins  by  check : 

400  bu.  Wheat  at  $1 

12.  Pay  Reading  &  Co.  by  check,  for  an  office  safe,  $75. 

13.  /Student  withdraws  cash,  for  personal  use,  $50. 


152  PRINCIPLES  OF  BOOKKEEPING 

June  13.  Wm.  G.  Allston  withdraws  cash,  for  personal  use,  $50. 

15.  Give  E.  S.  Harlan  your  note,  with  interest,  at  10  da.,  $120. 

16.  Receive  of  Graves  &  Co.  their  check,  on  invoice  of  June  6,  for  $175. 

17.  Give  Richard  S.  Goodman  your  check  for  the  invoice  of  June  9. 

18.  Receive  of  Henry  P.  Button  his  check  for  the  invoice  of  June  10. 

19.  Sell  Kelsey  &  Co.  on  account: 

200  bu.  Wheat  at  $1.25  100  bu.  Corn  at  75  0 

200  bu.  Oats  at  600 

20.  Receive   of   Graves  &  Co.  their   check   for   the   balance   of  the 
invoice  of  June  6. 

22.  Sell  Graves  &  Co.  on  account,  2%  10  da. : 

200  bu.  Wheat  at  $1.25  200  bu.  Corn  at  750 

100  bu.  Oats  at  600 

23.  Buy  of  Geo.  M.  Barber  on  account: 

500  bu.  Oats  at  480 
0 

24.  Sell  Henry  P.  Dutton  on  account: 

50  bu.  Wheat  at  $1.25  200  bu.  Oats  at  600 

25.  Pay  E.  S.  Harlan  by  check  for  your  note  and  interest  due  to-day. 

26.  Receive  of  Graves  &  Co.  their  check  for  the  invoice  of  June  22, 
less  2%. 

27.  Pay  Geo.  M.  Barber  by  check,  on  account,  $100. 
27.  Buy  of  E.  S.  Harlan  on  account: 

300  bu.  Wheat  at  $1 

29.  Receive  of  Henry  P.  Dutton  his  check,  on  account,  $75. 

30.  Receive  of  Kelsey  &  Co.  their  note,  with  interest,  at  30  da.,  $250. 
30.  Pay  Fred  A.  Walker,  your  clerk,  by  check,  one  month's  salary,  $45. 

Inventories,  June  30,  19 — 

Merchandise : 

400  bu.  Wheat  at  $1 
300  bu.  Corn  at  600 
400  bu.  Oats  at  480 

Office  Furniture : 

Office  Safe  $75. 

Office  Supplies : 

Office  Books  and  Stationery  10.50 


GENERAL  REVIEW  153 

Exercise  44.    Review 
For  Written  W<>,-1- 

1.  Make  the  statements  from  the  following  trial  balance.  Date  the 
statements  June  30,  19 — . 

In  this  trial  balance  use  is  made  of  Accounts  Receivable  and  Accounts  Payable; 
the  former  is  always  an  asset ;  the  latter,  a  liability.  These  terms  are  denned  on 
page  63. 

The  use  of  Accounts  Receivable  and  Account*  J'tiynhle  not  only  shortens  the  trial 
balance  but  gives  the  amount  owed  to  the  business,  and  the  amount  owed  by  the 
business  as  a  single  item. 

In  subsequent  work  these  terms  will  be  commonly  used. 

Cash.  $507.75 

Notes  Receivable  756.55 

Accounts  Receivable  504.50 

Mdse.  Inventory  700. 

Real  Estate  750. 

Building  and  Fixtures  1200. 

Office  Furniture  110.35 

Delivery  Equipment  350. 

Notes  Payable  $234.0.5 

Accounts  Payable  263.25 

Geo.  A.  Emerson,  Investment  2600. 

Geo.  A.  Emerson,  Drawing  65. 

Henry  S.  James,  Investment  2600. 

Henry  S.  James,  Drawing  65. 

Mdse.  Sales  2144.60 

Interest  Earned  17.45 

Mdse.  Discount  on  Purchases  8.10 

Mdse.  Purchases  2683.90 

Mdse.  Discount  on  Sales  13.55 

Office  Supplies  21.95 

Rent  Paid  42. 

Interest  Paid  31.50 

$7868.05         37868.05- 


Inventories,  June  30 : 

Merchandise  $1697.45 

Real  Estate  750. 

Building  and  Fixtures  1200. 

Office  Furniture  116.35 

Delivery  Equipment  350. 

2.  Transfer  to  sheets  of  ledger  paper  the  necessary  ledger  accounts. 
and  then  close  the  ledger. 


154  PRINCIPLES  OF  BOOKKEEPING 

Inventories.  Taking  stock,  sometimes  called  making  up  inventories,  is 
one  of  the  most  important  features  of  a  business,  at  the  period  when 
the  books  are  to  be  closed. 

The  following  will  make  an  interesting  study  for  the  class: 

Members  of  the  class,  in  groups  of  two,  may  be  appointed  to  secure 
facts  from  local  firms  as  to  the  taking  of  the  inventory,  and  such  in- 
formation as  the  merchant  may  choose  to  give,  and  report  to  the  class. 
Each  group  may  secure  material  from  a  different  business. 

A  profitable  discussion  should  grow  out  of  this  report. 

The  following  questions  are  suggestive : 

Under  what  conditions  should  an  article  be  inventoried  at  less  than 
cost? 

Why  do  merchants  often  have  a  special  sale  just  before  the  inventory 
is  taken  ? 

What  important  facts  are  revealed  by  the  taking  of  the  inventory  ? 

If  the  inventory  is  valued  too  high,  what  will  be  the  effect  on  the 
profit  and  loss  of  the  business  ?  on  the  proprietary  interest  ? 

If  the  inventory  is  valued  too  low,  what  effect  will  it  have  on  the 
profit  and  loss  of  the  business  ?  on  the  proprietary  interest  ? 


CHAPTER  XIII 

COMMERCIAL  DRAFTS1 

Commercial  Draft.  A  commercial  draft  is  a  written  order  in  which 
one  person  directs  another  to  pay  a  specified  sum  of  money  to  the 
order  of  himself  or  to  the  order  of  a  third  person. 

Use  of  the  Draft.  Commercial  drafts  are  used  primarily  to  effect  the 
settlement  of  debts  without  the  risk  or  the  inconvenience  of  trans- 
mitting money.  These  debts  may  be  past  due,  and  the  draft  is  used  as 
a  means  of  securing  payment.  More  frequently,  however,  the  draft  is 
used  because  of  the  terms  indicated  on  an  invoice,  as  follows :  Subject 
to  draft  in  30  da.  (or  some  period  that  may  be  named).  At  the  end  of 
the  30  da.  the  seller  draws  a  sight  draft  on  the  buyer  and  sends  it 
through  his  bank  of  deposit,  the  buyer  honors  the  draft  by  paying  it, 
and  the  money  is  sent  by  the  bank  making  the  collection  to  the  drawer 
or  to  his  bank  of  deposit. 

The  number  of  commercial  drafts  handled  by  banks  is  so  large  that 
they  represent  a  marked  feature  of  the  banking  business. 

Parties  to  a  Draft.  Usually  there  are  two  parties  to  a  draft,  as 
follows : 

The  drawer,  the  one  who  draws  the  draft. 

The  drawee,  the  one  on  whom  the  draft  is  drawn. 

A  large  number  of  the  commercial  drafts  used  as  a  means  of  collecting  debts 
are  dishonored.  The  drawee  refuses  to  pay  the  draft  when  it  is  presented  to  him. 
Unless  there  is  a  special  reason,  such  as  dealing  with  a  delinquent  debtor,  a  draft 
should  not  be  drawn  without  a  previous  arrangement  or  an  understanding  between 
the  persons.  Without  such  notice,  a  draft  ordinarily  has  no  more  significance  than 
the  sending  of  a  monthly  statement  of  account.  The  giving  of  the  notice  is  an 
expression  of  business  courtesy. 

Sight  paper  is  paper  payable  on  presentation. 

Sight  Draft.  To  illustrate  the  use  of  the  sight  draft  as  an  aid  in 
collecting  debts  that  are  past  due,  suppose  that  Edgar  McMickle,  Put- 
erson,  N.J.,  owes  Wilb.ert,  Closs  &  Co.,  Springfield,  Mass.,  $260.50. 

1  A  brief  study  of  the  commercial  draft  and  the  bank  draft  is  introduced  at  this  stage 
of  the  student's  work  for  the  convenience  and  accommodation  of  those  instructors  who 
desire  to  take  up  the  study  of  drafts,  in  a  brief  way,  in  connection  with  the  introductory 
work  of  the  text. 

155 


156 


PRINCIPLES  OF  BOOKKEEPING 


The  account  is  now  past  due,  and  Wilbert,  Closs  &  Co.  want  the 
money.  They  will,  after  proper  notice  to  the  drawee,  draw  the 
following  draft : 


'Pay  to  the  order  of 


'Dollars 


Value  received  and  charge  to  account  of 


Wilbert,  Closs  &  Co.  will  indorse  the  draft  and  leave  it  with  the 
Springfield  National  Bank  for  collection.  As  the  bank  has  no  account 
with  a  Paterson  bank,  they  will  again  indorse  the  draft  and  forward  it 
to  the  Chemical  National  Bank  of  New  York  City,  with  whom  they 
have  a  regular  account.  The  following  indorsements  will  appear  on 
the  back  of  the  draft: 


The  blank  indorsement,  simply  the  name,  is  but  little  used  in  business.  Banks 
insist  on  the  use  of  the  special,  or  full,  indorsement. 

A  number  of  indorsements  that  are  common  in  business  are  illustrated  and 
explained  on  pages  118  and  119. 

The  Chemical  National  Bank  will  collect  the  money  from  McMickle 
through  a  bank  in  Paterson,  and  then  notify  the  Springfield  National 
Bank  that  the  draft  has  been  collected  and  the  amount  credited.  The 
Springfield  National  Bank  notifies  Wilbert,  Closs  &  Co.  that  the  pro- 
ceeds have  been  credited. 


COMMERCIAL  DRAFTS 


157 


Entries.     The  following  are  the  entries  for  this  draft : 
The  Drawer's  Entry.    Wilbert,  Gloss  &  Co.  make  this  entry  on  the 
left  side  of  their  cashbook : 


f 

WILBERT,    (.'LOSS    &    CO.'S    CASHHOOK 


Should  the  bank  make  a  charge  for  collecting'  this  draft,  the  amount  of  such  a 
charge  would  appear  on  the  right  side  of  the  above  cashbook. 

The  Drawee's  Entry.    When  Edgar  McMickle  pays  the  draft,  he  will 
debit  Wilbert,  Gloss  &  Co.  on  the  right  side  of  his  cashbook,  as  follows : 


MCMICKLE S    CASHBOOK 


From  the  preceding  discussion  the  following  principles  are  deduced 
regarding  the  entries  for  commercial  sight  drafts : 

1.  The  drawer's  entry  when  lie  draws  a  sight  draft  in  his  own  favor, 
and  it  is  collected,  is  as  follows : 


Cash 


Drawee 


2.   The  drawee"1*  entry  when  he  pays  a  sight  draft  is  as  follows: 
Drawer  Cash 


Exercise  45.    Sight  Drafts 

For  Written  Work 

1.  Write  each  of  the  following  drafts,  at  sight,  and  make  the  entry 
for  each  party.    Use  the  current  date. 


DRAWER 

(a)  J.  C.  Green 

(Your  Place) 
(#)  Student 

(Your  Place) 
(e)  A.  B.  Mentor 

Chicago,  111. 
(d)  David  M.  Gay 

Alton,  111. 


DRAWEE 

Amos  Hamilton 

Albany,  N.Y. 
John  Garson 

Columbus,  Ohio 
Student 

(Your  Place) 
John  A.  Saxon 

(Your  Place) 


A MO I   NT 

$350. 


)2.10 

$378.~>0 
$1200. 


158  PRINCIPLES  OF  BOOKKEEPING 

2.  F.  A.  Wright,  Atlanta,  Ga.,  owes  you  $42.50  on  account.    Draw 
a  sight  draft  on  him,  in  favor  of  yourself,  indorse  it,  and  leave  it  at  The 
Union  Bank  for  collection.    In  5  da.  the  bank  informs  you  that  the  draft 
has  been  collected.    Make  the  entries. 

3.  The  Union  Bank  presents  a  sight  draft  drawn  by  O.  M.  Howe, 
Denver,  Colo.,  on  you,  in  favor  of  himself,  for  8104.25.   Pay  it  by  check 
and  make  the  entries. 

When  you  pay  a  sight  draft  drawn  on  you,  the  draft  should  be  canceled  and  kept 
as  a  receipt. 

4.  Frank  Weeks,  Austin,  Texas,  owes  you  §200  on  account.    Draw 
a  sight  draft  on  him,  in  favor  of  yourself,  for  that  amount,  indorse  it, 
and  leave  it  at  the  First  National  Bank  for  collection.   In  6  da.  the  bank 
informs  you  that  the  draft  has  been  collected.    Make  the  entries. 

REVIEW  QUESTIONS 

1.  Define  a  commercial  draft.  2.  State  the  object  of  drafts.  3.  What  names 
are  given  to  the  parties  to  a  draft  ?  4.  What  is  the  drawer's  entry  when  he 
draws  a  sight  draft  on  A  in  favor  of  B  ?  5.  What  is  the  payee's  entry  for  a 
sight  draft  received  and  collected  ?  6.  What  is  the  drawee's  entry  for  a  sight 
draft  paid  ?  7.  Do  all  drafts  have  two  parties  ?  Explain.  8.  How  is  a  sight 
draft  used  to  collect  a  debt?  9.  Is  it  wise  to  draw  on  a  good  customer 
without  notifying  him  in  advance?  Why?  10.  How  would  you -indorse  a 
sight  draft  left  at  The  Union  Bank  for  collection  ? 

Sight  Draft  Payable  to  a  Bank.  The  sight  draft  already  illustrated 
is  made  payable  to  Ourselves.  It  is  very  common,  however,  to  make 
these  -drafts  payable  to  the  bank  with  which  the  drawer  does  business. 
By  so  doing  he  avoids  the  necessity  of  indorsing  the  draft  after  he  has 
drawn  it. 

The  following  is  an  illustration  of  a  sight  draft  drawn  payable  to  the 
order  of  a  bank : 


$     (Zf*-  ^                                                                   SpringfifU,  .'XCm-L,                       (/^sf^l^ 

^L^2f         19  — 

'Pay  to  the  order  of 

Hanover  ^rust  Company 

'Oalue  received  and  charge  the  same  to  account  of 

o   -^y.  W.  /Sfa^^ft^rz^&Cs        \               _j^  ^y7^?^^; 

—  ^>^f>-r^/^f^^i^^f/—f^^^  ^>T    } 

COMMERCIAL  DRAFTS 


159 


This  draft  shows  that  G.  A.  Fetters  has  a  claim  against  S.  A.  Marshall, 
of  Columbus,  Ohio,  for  $68.40,  and  by  using  this  form  of  draft  or  by 
indorsing  it  to  a  bank,  the  bank  named  is  made  the  agent  for  colleeting 
the  draft. 

Who  is  the  drawer  of  this  draft  ?   the  drawee  ? 

What  is  the  relation  of  the  parties  in  this  draft  ? 

How  would  Marshall's  account  appear  on  Fetters's  ledger  at  the  time 
the  draft  was  drawn  ? 

What  entry  would  Fetters  make  when  he  received  word  that  the 
bank  had  collected  the  draft  ? 

What  entry  would  Marshall  make  when,  he  paid  the  draft? 

Assuming  that  the  Commercial  Trust  Co.  sent  the  draft  to  the  First 
National  Bank  in  Columbus,  Ohio,  what  indorsement  would  be  made 
on  the  back  of  the  draft  ? 

The  Three-Party  Draft.  There  may  be  three  parties  to  a  commercial 
draft,  as  follows  : 

The  drawer,  the  one  who  draws  the  draft. 

The  drawee,  the  one  011  whom  the  draft  is  drawn. 

The  payee,  the  one  to  whom  the  order  is  made;  payable. 

These  are  the  original  parties  to  a  three-party  draft. 

The  three-party  draft  is  used  less  frequently  than  the  two-party  draft. 

Study  the  sight  draft  on  page  160  in  connection  with  the  accompany- 
ing diagram,  which  sets  forth  the  relation  of  the  parties  in  the  draft. 

The  persons  to  a  three-party 
commercial  draft  usually  bear 
the  following  relation  to  each 
other  : 

The  drawee  generally  owes 
the  drawer. 

The  drawer  generally  owes 
the  payee. 

The   payee   and   the    drawee 

bear  no  relation  to  each  other. 


F.  C.  Gorluun,  drawee,     owes     Mason  &  YOUHK,  drawers, 

Springfield 


The  drawee  and  the  payee  usually  live  in  the  same  place. 

While  not  bound  to  do  so,  the  drawer  usually  notifies  the  drawee  before  or  at  the 
time  of  drawing  the  draft. 

It  is  customary  to  send  it  to  the  payee,  and  he  presents  it  to  the  drawee 
for  payment. 

Entries.  The  following  illustrations  set  forth  the  form  and  the  entries 
for  the  three-party  draft  : 


160 


PKIXCIPLES  OF   BOOKKEEPING 


^/9^= 


(S) 


..'Pay  to  the  order  of 


dollars 


"Dalue  received  and  charge  to  account  of 


The  Drawer's  Entry.    Mason  &  Young  mail  the  above  draft  to  C.  W. 
Gray,  and  make  this  journal  entry : 


MASON  &   YOUNG S   JOURNAL 

Mason  &  Young  have  given  C.  A^^.  Gray  an  order  equivalent  to  $500  cash,  when 
presented  to  Gorham ;  therefore  they  should  debit  Gray. 

When  F.  C.  Gorham  pays  the  sight  draft,  he  gets  out  of  Mason  &  Young's  debt, 
$500.  He  gave  the  money  to  Gray,  but  for  the  account  of  Mason  $•  Young;  therefore 
Mason  &  Young  will  credit  F.  C.  Gorham. 

The  Payee's  Entry.  Immediately  upon  the  receipt  of  this  draft  Gray 
will  take  it. to  F.  C.  Gorham  and  receive  the  cash,  or  deposit  it  in  his 
bank  for  collection  and  credit.  Gray  will  get  the  cash,  $500 ;  he  will 
make  this  cashbook  entry  on  the  left  side: 


GRAY'S  CASHBOOK 


The  cash  received  by  Gray  came  from  Mason  &  Young  through  Gorham ;  there- 
fore Gray  should  credit  Mason  &  Young,  as  they  have  canceled  a  debt  they  owed 
to  him. 


COMMERCIAL  J)KAFI> 


161 


The  Drawee's  Entry.    When  the  draft  is  presented  to  Gorham,  he  will 
pay  it,  and  make  this  cashbook  entry  on  the  right  side: 


S00 


OOKHAM'S  CASH  HOOK 


Gorham  paid  Gray  $500,  but  he  paid  one  of  his  debts  to  Mason  &  Young,  and 
thus  got  out  of  their  debt;  therefore  he  should  ili'hlt  them. 

Model  Draft  and  Entries.    The  following  illustrations  suggest  a  model 
for  the  student  to  follow  in  writing  drafts  and  in  making  the  entries: 


$Joo 


THE    D11AFT 


o  o 


DRAWERS   JOUHXAI.    KXTRV 


•3  ff  0 


PAYEES    EXTRY   OX    LEFT    SIDE    OE    CASHHOOK 


DRAWEE'S  ENTRY  ox  RIGHT  SIDE  OF  CASHHOOK 


162  PRINCIPLES  OF  1JOOKKEEPIXG 

Bank  Drafts.  Business  men  usually  keep  an  account  with  a  bank 
and  make  a  large  proportion  of  their  payments  by  check.  However, 
they  find  it  necessary  sometimes  to  make  payment  to  persons  or  firms 
who  do  not  care  to  give  credit  for  private  checks,  and  then  some  other 
form  of  transfer  must  be  used.  A  very  common  and  convenient  form 
of  remittance  is  by  means  of  a  check  of  one  bank  upon  another.  This 
is  called  a  bank  draft. 

Suppose  that  C.  C.  Canan,  Boston,  Mass.,  wishes  to  buy  a  bill  of 
goods  of  Jordan,  Marsh  &  Co.,  New  York,  amounting  to  $400.60.  If 
his  financial  standing  is  unknown  to  Jordan,  Marsh  &  Co.,  he  should 
not  send  his  personal  check.  He  therefore  draws  the  following  check 
and  exchanges  it  at  his  bank  for  a  New  York  draft: 


{Boston,  3£ass., V^sf^csis  /  (a ;  19 

traders  Rational 


'Pay  to  the  order  q 

^^^^^^L^L^^Z. 


CHECK  TO  PAY  FOR  BANK  DKAFT 


The  check  is  drawn  for  500  more  than  the  face  of  the  draft,  and 
this  charge  is  called  exchange.  Some  banks  do  not  make  any  charge  to 
regular  customers.  For  this  check  the  Traders  National  Bank  will  issue 
the  following  draft : 


traders  Rational 

'Pay  to  the  order  of 


CosAier 


BANK   DKAFT 


COMMERCIAL  DKAFTS 


163 


A  bank  draft  is  usually  drawn  payable  to  tbe  order  of  tbe  purchaser, 
who  indorses  it  to  the  person  or  the  iirin  to  whom  it  is  to  be  sent,  as 
shown  herewith. 

In  this  way  the  name  of  the 
sender  appears  on  the  draft,  and 
he  is  identified  as"  such. 

The  one  who  purchases  a  bank  draft 
may  require  that  the  name  of  the  one 
to  whom  it  is  to  be  sent  shall  appear 
as  the  payee. 

In  opening  letters  that  contain  drafts, 
if  the  name  of  the  sender  does  not  ap- 
pear on  the  draft,  care  must  be  taken  to 
keep  the  draft  and  the  letter  together. 
If  his  name  is  on  the  draft,  it  may  be 
identified  without  the  letter.  AX  IXDOKSKD  RANK  DKAKT 

Entries.  The  sending  of  this  draft  constitutes  a  cash  payment  by 
C.  C.  Canan  to  Jordan,  Marsh  &  Co.,  and  he  makes- the  following  entry 
on  the  right  side  of  his  cashbook : 


<&/2^2^rz^l-£' 


Upon  the  receipt  of  the  draft  Jordan,  Marsh  &  Co.  will  make  this 
cashbook  entry  on  the  left  side : 


7 


When  Jordan,  Marsh  &  Co.  make  their  deposit  for  the  day,  they  will  include  the 
draft  received  from  Canan,  swc/i  ^/rq/?s  being  treated  as  check*. 


"><Exercise  46.   Bank  Drafts 

For  Oral  Work 

1.  Receive  from  Henry  Belmont  a  bank  draft,  to  apply  on  account, 
$750.     Give  your  entry  ;  give  his  entry.     No  exchange  charged. 

2.  Receive  from  Green  &   Co.  a  bank  draft,  to  apply  on   account, 
$328.40.    Give  your  entry;  give  their  entry.    No  exchange  charged. 

3.  Buy  of  your  local  bank  by  check,   Henry  C.  Lucas,  Cashier,  a 
draft  on  the  Chemical  National  Bank,  of  New  York,  No.  6846,  payable 
to  your  order,  for  $250.    Send  it  to  Louis  I.  Brace  in  payment  of  your 


164  PRINCIPLES  OF  BOOKKEEPING 

note  due  to-day.    Give  your  entry ;  give  his  entry.    Indicate  the  proper 
indorsement.    No  exchange  charged. 

4.  Buy  of  the  First  National  Bank,  of  your  city,  Thomas  E.  Gross, 
Cashier,  a  draft  on  the  Second  National  Bank,  of  New  York,  No.  2378, 
payable  to  your  order,  for  §32.50.    Indorse  it  and  send  it  to  the  Jones 
Manufacturing  Company  for  a  set  of  office  books,  to  be  used  in  your 
office.    Give  your  entry ;  give  their  entry.    No  exchange  charged. 

5.  As  a  review,  write  the  check  and  the  draft  called  for  in  problem  3. 


Time  Drafts.  Time  drafts  are  of  two  kinds :  namely,  those  payable 
a  certain  time  after  date,  and  those  payable  a  certain  time  after  sight 
(that  is,  a  certain  time  after  presentation  for  acceptance). 


A  DRAFT  PAYABLE  AFTER  DATE 


Acceptances.  An  acceptance  is  a  time  draft  which  has  been  accepted. 
The  preceding  form  is  an  acceptance,  and  it  is  treated  in  business  as  a 
promissory  note. 

Without  the  writing  across  the  face  of  this  draft  it  was  not  binding  upon  the 
drawee.  He  had  not  agreed  to  pay  the  draft,  and  could  not  be  held  legally  for 
payment. 

Method  of  Procedure  in  handling  Time  Drafts.  The  drawer  writes 
the  draft  and  mails  it  to  the  drawee. 

In  the  foregoing  draft  the  date  of  maturity  was  not  determined  by 
the  acceptance,  as  it  is  expressly  stated  in  the  body  of  the  draft  that  it 
is  to  be  paid  15  da.  after  July  8,  and  this  statement  fixes  the  date  of 
maturity,  July  23. 

When  the  foregoing  draft  is  presented  or  received,  Carlson  is  not 
bound  to  accept  it,  though  it  is  a  fair  assumption  that  the  draft  would 
not  have  been  sent  to  him  without  the  previous  assurance  that  he 
would  accept  it.  However,  if  he  does  accept  it,  he  becomes  the 


COMMERCIAL  DRAFTS 


165 


acceptor,  and  is  held  for  its  payment  at   maturity,  the  same  as  if   he 
had  written  his  promissory  note  for  the  amount. 

Manner  of  Accepting.  If  the  drawee  is  willing  to  meet  a  draft  on 
him  according  to  the  conditions  named  therein,  he  writes  the  word 
Accepted,  and  signs  his  name.  This  is  generally  done  in  red  ink  across 
the  face  of  the  draft,  though  the  color  of  the  ink  has  no  significance. 

In  those  states  that  allow  days  of  grace  on  sight  drafts  it  is  necessary  to  have 
them  accepted  in  the  same  manner  as  time  drafts  payable  after  sight,  unless  they 
are  paid  upon  presentation. 

To  honor  a  sight  draft  is  to  pay  it;  to  honor  a  time  draft  is  to  accept  it  or  to 
prepay  it. 

Analysis  of  Entries  of  Parties  to  a  Time  Draft.  Compare  the  fore- 
going draft  with  the  sight  draft  explained  on  page  156.  The  relation  of 
the  parties  is  identical.  Carlson  is  indebted  to  Edison  &  Main.  It  is 
expected  that  Carlson  will  accept  the  draft  when  it  is  presented  to  him. 

Drawer's  Entry.  When  Edison  &  Main,  the  drawers,  receive  the  draft 
after  it  had  been  accepted  by  Elmer  B.  Carlson,  the  drawee,  they  have  in 
their  possession  an  acceptance,  a  notes  receivable ;  that  is,  a  written  prom- 
ise for  the  payment  of  money.  The  drawers  make  the  following  entry: 


/  2- 


EDISON    &    MAIN'S   .JOURNAL    ENTKY 


Drawee's  Entry.  When  Elmer  B.  Carlson,  the  drawee,  accepted  the 
foregoing  draft,  he  made  it  an  acceptance,  which  is  the  same  as  a  note* 
payable  issued  by  him  ;  that  is,  his  Avritten  promise  to  pay  a  certain  sum 
of  money.  The  drawee  Avould  make  the  following  journal  entry: 


ELMER  B.  CARLSON'S  JOURNAL  ENTKY 


Draft  Payable  after  Sight.  This  draft  is  the  same  as  the  one  payable 
after  date  except  as  to  the  manner  of  acceptance.  In  an  order  payable  after 
sight  it  is  necessary  to  date  the  acceptance  to  fix  the  date  of  maturity. 


166 


PRINCIPLES  OF  BOOKKEEPING 


?,  19  — 


X5 


A    DRAFT   PAYABLE   AFTER    SIGHT 

The  difference  between  a  draft  payable  after  date  and  one  payable  after  sight  is 
that  the  former  begins  to  mature  on  the  date  of  the  draft,  and  the  latter  on  the  date 
on  which  the  draft  is  accepted.  The  date  of  acceptance  must  be  given  in  a  draft 
payable  after  sight,  while  it  may  or  may  not  be  given  in  a  draft  payable  after  date. 

Summary.  From  the  preceding  discussion  the  following  principles 
are  deduced  regarding  the  entries  for  time  drafts : 

1.  The  drawer  s  entry  when  he  receives  his  draft,  drawn  in  his  own 
favor,  accepted,  is  as  follows: 

Notes  Receivable  Drawee 

2.  The  drawee's  entry  when  he  accepts  a  time  draft  is  as  follows: 

Drawer  Notes  Payable  * 

Exercise  47.   Time  Drafts 

For  Written  Work 

1.  On    May    20    you    drew    a   30-day    draft   on   James   B.    Kitner, 
Des  Moines,  Iowa,  for  $145.20,  and  remitted  it  to  him.    On  May  26 
the  draft  was  received  by  you  accepted. 

a.  Write  the  draft  and  show  the  acceptance.    Make  your  entry. 

b.  Make  your  entry  when  you  receive  payment  for  the  acceptance. 

2.  On  June  4  A.  S.  Burtoi\,  Omaha,  Nebr.,  drew  a  15-day  sight  draft 
on  you  for  $184.    You  received^  uTe  "cfraft  and  accepted  it  on  June  7, 
and  then  returned  it  to  A.  S.  Burton. 

j^  Jti.  Write  -the  draft  and  show  the  acceptance.    Make  your  entry. 

b.  Make  your  entry  when  you  pay  the  acceptance. 

c.  How  does  the  acceptance  on  this  draft  differ  from  the  acceptance 
in  problem  1  ? 

d.  If  when  you  accepted  problem  2  you  had  made  it  payable  at  the 
Union  Trust  Co.,  what  effect  would  it  have  had  on  the  acceptance  ? 


CHAPTER   XIV 


THE  DIRECT  METHOD  OF  CLOSING  THE   LEDGER 

Methods.  There  are  two  general  methods  of  closing-  the  ledger,  — 
the  journal  method  and  the  direct  method.  The  former  has  been  fully 
explained  in  the  preceding  pages  of  the  text. 

The  Direct  Method.  In  the  direct  method  all  inventories  and  profit 
and  loss  amounts  are  entered  directly  in  the  required  ledger  accounts, 
in  red  ink,  and  all  transfers  of  these  amounts  are  entered  in  black  ink. 

The  direct  method  is  here  explained  because  students  should  be  t'amiliar  with 
both  methods  of  closing  the  ledger. 

Merchandise  Accounts.  The  first  illustrations  will  be  of  the  merchan- 
dise accounts,  and  the  transfers  necessary  to  find  the  profit  on  the 
merchandise  sold.  The  following  merchandise  accounts  and  closing 
inventory  are-  used  in  the  illustration  : 

MERCHANDISE  PURCHASES 


19- 

Jan. 

6 

5 

1200 

19 

6 

1850 

26 

7 

850 

MERCHANDISE  S 


10 


On  Jan.  31  the  merchandise  inventory  was  $1100. 

NOTE.    Any  amount  or  line  that  is  starred  (*)  is  to  be  written  in  red  ink. 

1.  The  first  step  is  to  record  the  inventory  in  the  Merchandise  Pur- 
chases  account  and  to  transfer  it  to  the  Merchandise  Inventory  account. 
Open  an  account  with  Merchandise  Inventory. 

After  recording  the  inventory  the  accounts  will  appear  as  follows : 

167 


168 


PRINCIPLES  OF  BOOKKEEPING 
MERCHANDISE  PURCHASES 


19— 

iD- 

Jan. 

6 

5 

1200 

Jau. 

31 

*  Inventory 

2 

1100 

19 

6 

1350 

26 

7 

850 

MERCHANDISE  INVENTORY 


19— 

Jan. 

31 

7 

1100 

2.  The  Merchandise  Purchases  account  shows  that  merchandise  to  the 
amount  of  $3400  was  purchased,  and  that  merchandise  valued  at  $1100 
remained  unsold  on  Jan.  31.  The  difference  between  these  amounts  is 
the  cost  of  the  merchandise  sold.  After  this  difference  ($2300)  has  been 
entered  in  the  account,  it  should  be  transferred  to  the  debit  of  the 
Merchandise  Sales  account.  The  accounts  will  then  appear  as  follows: 

MERCHANDISE  PURCHASES 


19— 

19— 

Jan. 

6 

5 

1200 

Jan. 

31 

*  Inventory 

2 

1100 

19 

6 

1350 

31 

*  Cost  of  Sales 

5 

2300 

26 

7 

850 

3400 

3400 

MERCHANDISE  SALES 


19— 

19— 

Jan. 

31 

Cost  of  Sales 

7 

2300 

Jan. 

10 

0 

950 

23 

7 

750 

29 

8 

900 

3.  The  amount  of  the  sales  equals  $2600,  and  the  cost  of  the  mer- 
chandise sold  equals  $2300.  The  difference  is  the  gross  profit  on  sales. 
After  this  difference  ($300)  has  been  entered  in  the  account,  it  is 
transferred  to  the  credit  of  the  Profit  and  Loss  account.  The  accounts 
will  then  appear  as  follows: 


THE  DIRECT  METHOD  OF  CLOSING   THE   LEDGER       169 
MERCHANDISE   SA  LES 


19— 

19— 

Jan. 

31 

Cost  of  Sales 

7 

2300 

Jan. 

10 

6 

950 

31 

*  Profit  and  Loss 

4 

300 

2:! 

7 

750 

2!) 

8 

900 

•2GOO 

2000 

PKOFIT  AND    Loss 


19— 
Jan. 

81 

Mdse.  Sales 

5 

300 

Accounts  which  show  Losses.  The  next  step  will  be  to  transfer  the  losses 
recorded  in  certain  accounts  to  Profit  and  Loss.  To  illustrate,  assume  that 
the  'Rent  Paid  account  is  debited  with  $25.  This  loss  is  transferred 
directly  to  the  Profit  and  Loss  account.  After  this  is  done,  the  accounts 
will  appear  as  follows : 

RENT  PAID 


19— 
Jan. 

3 

5 

25 

19— 

Jan. 

31 

*  Profit  and  Loss 

4 

25 

PROFIT  AXD  Loss 


19— 

Jan. 

31 

Rent  Paid 

6 

25 

19— 

Jan. 

81 

Mdse.  Sales 

5 

300 

If  a  Salary  account  were  debited  with  $45,  it  would  be  closed  by 
transferring  the  loss  directly  to  the  Profit  and  Loss  account.  After 
this  is  done,  the  accounts  will  appear  as  follows : 


SALARY 


19— 
Jan. 

15 

5 

45 

19— 
Jan. 

31 

*  Profit  and  Loss!  4         15 

1      i 

170 


PKINCIPLES  OF, BOOKKEEPING 
PROFIT  AXD  Loss 


19— 

19— 

Jan. 

31 

Rent  Paid 

6 

25 

Jan. 

31 

Mdse.  Sales 

7 

300 

31 

Salary 

6 

4.-> 

Proprietor's  Account.  The  next  step  is  to  transfer  the  difference 
between  the  debits  and  the  credits  of  the  Profit  and  Loss  account  to 
the  Proprietor's  account.  This  difference  (f 230)  represents  the  net  profit. 
After  this  is  done,  the  accounts  will  appear  as  follows : 


PROFIT  AXD  Loss 


19— 

19— 

Jan. 

31 

Rent  Paid 

6 

25 

Jan. 

31 

Mdse.  Sales 

7 

300 

31 

Salary 

6 

45 

31 

*D.  L.Net  Profit 

4 

230 

300 

.300 

DAVID  LAN?:,  PROPRIETOR 


19— 

Jan. 

1 

2 

1500 

31 

Profit  and  Loss 

4 

230 

In  the  Proprietor 's  account  enter  the  Present  Worth  in  red  ink  on  the 
debit  side ;  rule  the  account,  and  then  transfer  the  Present  Worth  on 
the  credit  of  the  account,  below  the  rulings,  in  black  ink,  under  Feb.  1. 

The  account  will  then  appear  as  follows: 

DAVID  LAXE,  PROPRIETOR 


19— 

19— 

Jan. 

31 

*  Present  Worth 

1730 

Jan. 

1 

2 

1500 

31 

Profit  and  Loss 

7 

L':50 

1730 

1780 

Feb. 

1 

Present  Worth 

1730 

This  completes  the  closing  of  the  ledger  by  the  direct  method. 

The  various  exercises  in  the  text  for  closing  the  ledger  may  be  used  for  addi- 
tional work  in  the  class. 


THE  DIRECT  METHOD  OF  CLOSING   TILE   LEDGER       171 


Additional  Points.  In  succeeding  periods  the  merchandise  inventory 
at  the  beginning  of  the  period,  as  recorded  in  the  Merchandise  Inven- 
tory account,  should  be  transferred  to  the  Merchandise  Purchases 
account.  The  steps  as  outlined  above  should  then  be  followed  in  order. 

If  the  cost  of  the  merchandise  sold  exceeds  the  sales  price,  a  loss  on 
sales  results,  which  should  be  transferred  to  the  debit  of  the  Profit  and 
Loss  account.  The  net  loss  should  be  transferred  to  the  debit  of  the 
Proprietor's  account. 

The  accounts  which  show  profits  other  than  the  protit  on  merchandise 
sold  are  each  closed  directly  into  the  Profit  and  Loss  account.  To  illus- 
trate, assume  that  the  Interest  Earned  account  shows  a  credit  of  $10. 
After  this  amount  is  transferred  to  the  Profit  and  Loss  account,  the 
accounts  will  appear  as  follows  : 

INTEREST  EARNED 


19— 
Mar. 

81 

*  Profit  and  Loss 

4 

10 

19- 
Mar. 

2i) 

2 

10 

PROFIT  AND   Loss 


19— 

Mar.   1:51 


Ki 


The  Sundry  Expense  Inventories  account  may  be  used  to  record  the 
amounts  of  unused  office  supplies,  fuel  on  hand,  etc.,  under  the  direct 
method  of  closing  the  ledger,  the  same  as  in  the  journal  method.  The 
only  difference  is  that  the  amounts  would  be  recorded  and  transferred 
directly  rather  than  entered  in  the  journal  and  posted  to  the  ledger. 

Exercises  28,  31,  and  38  are  suggested  for  reviews,  for  closing  the  ledger. 


CHAPTER  XV 

GENERAL  REVIEW 

Exercise  48.    Review  of  Debits  and  Credits 

For  Written  Work 

Directions.  In  this  exercise  postings  are  to  be  made  directly  to  the 
ledger.  Open  the  necessary  accounts  on  a  sheet  of  ledger  paper ;  allow 
five  lines  for  each  account. 

Proceed  as  follows: 

1.  In  each  transaction,  note  mentally  the  debit  and  the  credit,  and 
post  directly  to  the  ledger. 

ILLUSTRATION.  Suppose  you  receive  a  note  from  John  Brown  for  $200.  On 
the  ledger,  debit  Notes  Receivable  and  credit  John  Brown. 

2.  For  each  cash  item  received,  credit  the  account  for  the  amount 
received ;  for  each  cash  item  paid  out,  debit  the  account  for  the  amount 
paid.    Post  the  total  receipts  and  the  total  payments  of  cash. 

3.  Credit  each  purchase,  and  debit  the  footing. 

4.  Debit  each  sale,  and  credit  the  footing. 

5.  In  the  journal,  determine  the  proper  debits  and  credits,  and  post. 

6.  Take  a  trial  balance ;  if  correct,  hand  all  work  to  the  instructor. 

The  following  are  the  cashbook  entries : 
June  1.    Student  invested  cash,  $1450. 

2.  Paid  Burton  A.  Pease  cash,  for  rent  of  the  store  for  June,  $40. 

3.  Paid  Ely  &  Co.  cash,  for  office  supplies,  $12.50. 

6.  Paid  Lowder  &  Co.  cash,  for  3  T.  coal  for  the  office,  $15.75. 
10.  Received  of  Esten  &  Clark  cash,  to  apply  on  account,  $54.20. 
12.  Gave  Arnold  &  Co.  a  check,  to  apply  on  account,  $135. 
14.  Received  of  A.  H.  Brownell  a  check  for  the  invoice  of  June  4. 
16.  Received   of  Leon   B.  Shaw  cash  for  the  invoice   of  June  12  y 
less  \°J0. 

20.  Paid  Harry  S.  Moore  cash  for  the  invoice  of  June  10. 

22.  Paid  John  Clark  cash,  for  cleaning  the  store  windows,  $2. 

23.  Received  of  H.  C.  Gowdy  cash,  to  apply  on  account,  $200. 

24.  Received  of  Silver  &  Case  a  check  for  the  invoice  of  June  24^ 
less  1%. 

172 


GENERAL  REVIEW  173 

June  25.    Received  of  Esten  &  Clark  cash,  for  their  note  due  to-day, 
$100. 

26.  Paid  H.  S.  Ranger  cash  for  the  invoice  of  June  JO,  less  \<j<,. 

27.  Gave  H.  C.  Putman  a  check  for  the  invoice  of  June  26,  less  1%. 

29.  Received  of  Silas  N.  Cook  cash,  to  apply  on  account,  $150. 

30.  Paid  Henry  Gray,  a  clerk,  cash,  830. 

The  following  purchases  were  made  : 
June  3.    Arnold  &  Co.,  on  account,  8335. 
10.  Harry  S.  Moore,  at  10  da.,  §275.20. 
20.  H.  S.  Ranger,  1/10,  n/30,  $525. 
26.  H.  C.  Putman,  cash,  less  1%,  §400. 
30.  Harold  D.  Service,  "/30,  S2U5.25. 

The  following  sales  were  made : 

June  4.    A.  H.  Brownell,  at  10  da.,  $21(>.25. 

8.  Esten  &  Clark,  on  account,  $154.20. 
12.  Leon  B.  Shaw,  2/10,  n/30,  $250. 
16.  H.  C.  Gowdy,  on  account,  |325. 
24.  Silver  &  Case,  cash,  less  1%,  8300. 
29.  Silas  N.  Cook,  on  account,  $212.60. 

The  following  notes  were  received  or  given : 

June  15.    Received  of  Esten  &  Clark  their  note  at  10  da.  for  8100. 

18.  Gave  Arnold  &  Co.  your  note  at  30  da.  for  §200. 

Exercise  49.    Review  of  Checks  and  Drafts 
For  Written  Work 

Directions.    Journalize  each  transaction,  post  to  the  ledger,  and  take 
a  trial  balance.     In  the  ledger,  allow  five  lines  for  each  account. 
Use  sheets  of  journal  paper  and  ledger  paper. 
After  completing  the  work,  hand  it  to  the  instructor. 

June  1.   Student  begins  business  with  the  following  assets  and  liabilities : 

N  Merchandise,  stock  on  hand,  $2456.10 
N  Cash  on  hand,  $845.20 

The  following  owe  you  on  account : 
Frank  M.  Good,  $148.10 
James  D.  Harris,  $86.50 
Fred  D.  Wickens,  $112.75 
Hastings  &  Co.,  $136.45 
Notes  Eeceivable,  J.  N.  Hensen's  note,  $225 
Notes  Payable,  in  favor  of  Helm  &  Co.,  8150 


174  PRINCIPLES  OF  HOOK  KEEPING 

You  owe  the  following  on  account : 
Wright  &  Son,  $234.60 
O'Xiel  &  Co.,  §115 
Keeley  &  Stacy,  §145.65 
Richard  A.  West,  $275 

Credit  the  Proprietor  for  his  net  investment. 

June  2.  Receive  of  Frank  AI.  Good  a  check,  to  apply  on  account, 
190.25. 

4.  The  sight  draft  which  you  drew  on  James  D.  Harris  for  $86.50 
has  been  collected  by  your  bank. 

5.  Give  Wright  &  Son  a  check,  to  apply  on  account,  $85. 

6.  Buy  at  the  First   National  Bank  a  New  York   draft.    After  in- 
dorsement, remit  it  to  Helm  &  Co.  in  settlement  of  your  note  and  the 
interest,  in  their  favor.    Face  of  the  note,  $150;  interest,  $1.50. 

10.  Receive  of  Fred  D.  Wickens  a  sight  draft  in  your  favor,  drawn 
on  L.  M.  Mitchell,  of  your  city,  for  $112.75,  to  apply  on  account. 

13.  The  sight  draft  which  you  drew  on  Hastings  &  Co.  for  $100 
has  been  collected  by  your  bank. 

15.  Give  Richard  A.  West  a  check,  to  apply  on  account,  $120. 

16.  Receive  of  J.  N.  Hensen  a  Chicago  draft,  indorsed  to  you,  for 
his    note    and    the    interest,    due    to-day.      Face    of    the    note,    $225 ; 
interest,   $4.50. 

20.  Give  O'Niel  &  Co.  your  check,  to  apply  on  account,  $75. 

25.  Receive  of  Frank  M.  Good  a  check,  in  full  of  account,  $57.85. 

26.  Give  Wright  &  Son  a  check,  to  apply  on  account,  $110. 

27.  Give  Keeley  &  Stacy  a  check,  to  apply  on  account,  $85. 

SET  H.     GENERAL  MERCHANDISE 

Opening  the  Set.    Observe  the  following  directions: 

1.  This  set  is  to  be  written  on  sheets  of  journal  paper  and  ledger 
paper. 

2.  It  is  a  general  merchandise  business  in  which  the  invoice  totals 
are  given,  both  for  the  purchases  and  for  the  sales. 

3.  Use  the  following  books:  cashbook,  journal,  purchase  book,  sales 
book,  and  ledger. 

4.  On  the  journal  sheet,  record  the  journal  and  the  purchase  book 
on  page  1,  the  cashbook  on  pages  2  and  3,  the  sales  book  on  page  4. 

5.  In  the  ledger,  allow  five  lines  for  each  account,  except  the  Profit 
and  Loss  account,  for  which  allow  ten  lines. 

6.  Ernest  B.  Faxon  is  represented  as  the  proprietor. 


GENERAL  KEVIEVV  175 

MEMORANDA  OF  TRANSACTIONS 

May  1.  Ernest  B.  Faxon  began  a  (Jeneral  Merchandise  business  with 
the  following  assets:  cash  on  hand,  $1285.40;  merchandise,  stock  on 
hand,  $1536.85;  note  of  A.  M.  Freeman,  in  favor  of  the  Proprietor, 
dated  April  20,  at  30  da.,  with  interest,  $250. 

Make  a  journal  entry  for  the  above,  and  check  the  cash  item. 
Record  the  cash  in  the  eashbook,  and  check  it. 

2.  Engage  Theodore  Slayton  as  clerk  at  835  per  month. 
No  entry  for  the  above. 

% 

3.  Bought  of  Arden  &  Race  an  invoice  of  merchandise  amounting 
to  $322.50.    Terms :  10  da, 

4.  Paid  B.  N.  Halsey  cash,  for  rent  of  the  store  for  May,  $45. 

5.  Sold   H.   M.   Pierson   an    invoice    of   merchandise   amounting  to 
$182.50.    Terms:  30  da. 

6.  Sold  Chas.  'S.   Earle   an   invoice   of   merchandise  amounting  to 
$202.50.     Terms:   cash,  less  1 '/. 

8.  Bought  of  Gordon  &  Co.,  for  cash,   ol'licc    books  and   supplies, 
$17.20. 

9.  Gave  Little  &  Co.  a  check,  for  fuel  for  use  in  the  store,  $26.25. 

10.  Bought  of  Arthur  Bowers  an  invoice  of  merchandise  amounting 
to  $262.40.    Terms:  cash,  less  \%. 

11.  Paid  cash,  for  stamps  and  post  cards,  $5. 

12.  Sold   Fred  T.  Lynch  an  invoice   of   merchandise   amounting   to 
$175.20.    Terms:  on  account. 

13.  Paid  Arden  &  Race  by  check,  to  apply  on  account,  $122.50. 

15.  Gave  Arden  &  Race  a  note  at  30  da.  for  $200,  to  balance  their 
account. 

Rule  their  account. 

16.  Received  of  H.  M.  Pierson  a  sight  draft  on   Lowney  ov  Co.,  in 
favor  of  the  Proprietor,  for  $100,  to  apply  on  account. 

17.  Received  of  H.  M.  Pierson  a  check  for  the  balance  of  the  invoice 
of  May  ,5. 

18.  Bought  of  Hunter  &  Son  an  invoice  of  merchandise  amounting 
to  $258.50.    Terms:   2/10,  n/30. 

19.  Sold   Benj.  I.   Weed    an    invoice    of   merchandise    amounting  to 
$156.50.    Terms:  1/10,  n/30. 

20.  Received  of  A.  M.  Freeman  a  check  for  his  note  and  the  interest, 
due  to-day.    Face  of  the  note,  $250;  interest  for  30  da.  at  6%. 


176  PRINCIPLES  OF  BOOKKEEPING 

May  22.  Sold  Arthur  H.  Clay  an  invoice  of  merchandise  amounting 
to  $201.45.    Terms:   10  da. 

23.  Bought  of  T.  N.  Woodson  an  invoice  of  merchandise  amounting 
to  $194.75.    Terms:  on  account. 

24.  Gave  Theodore  Slay  ton  a  check  for  $15,  to  apply  on  his  monthly 
salary. 

25.  Sold  Chas.  M.  Dewey  an  invoice  of  merchandise  amounting  to 
$198.65.    Terms :  on  account. 

26.  Bought  by  check,  at  the  First  National  Bank,  a  New  York  draft 
and  remitted  it  to  Hunter  &  Son  for  the  net  amount  of  the  invoice 
bought  of  them  on  May  18. 

27.  Gave  T.  N.  Woodson  a  check,  to  apply  on  account,  for  $120. 
29.  Bought  of  Loomis  Bros,  an  invoice  of  merchandise  amounting  to 

$248.90.    Terms:  on  account. 

29.  Received  of  Benj.  I.  Weed  a  Chicago  draft  for  the  net  amount 
of  the  invoice  sold  to  him  on  May  19. 

30.  Sold   Farmer  &   Co.    an  invoice   of   merchandise   amounting   to 
$145.55.    Terms:  10  da. 

30.  Prepaid  the  note  given  to  Arden  &  Race  on  May  15,  less  the 
discount  for  the  time  the  note  has  yet  to  run. 

Credit  Interest  Earned  for  the  discount. 

31.  Gave  Theodore  Slayton  a  check,  for  the  balance  of  his  monthly 
salary,  for  $20. 

31.  Gave  T.  N.  Woodson  a  note  at  20  da.  for  the  balance  of  the 
invoice  bought  of  him  on  May  23. 

Inventories,  May  31,  19 — 

Merchandise  $1871.40 

Office  Supplies  12. 

Fuel  20. 

Closing  the  Set.    Proceed  as  follows : 
Rule  and  foot  the  different  books,  and  then  post. 
Take  a  trial  balance,  and  then  make  the  statements. 
Close  the  ledger.    Take  a  second  trial  balance. 
Pass  all  work  to  the  instructor. 


CHAPTER  XVI 


.19— 


tg'-^--Z>7, 


ADDITIONAL  BUSINESS  FORMS  AND  MISCELLANEOUS  EXERCISES 

The  work  of  this  chapter  is  purely  optional.  Many  students  study 
bookkeeping  only  one  year,  and  some  instructors  deem  it  wise  to  give 
these  students  such  information  as  this  chapter  contains,  for  it  is  their 
only  opportunity  to  gain  knowledge  of  this  character,  which  is  valuable 
to  every  student  whether  he  enters  business  or  professional  life. 

If  a  student  studies  bookkeeping  for  more  than  one  year,  the  work  in  this 
chapter  may  be  deferred. 

MONTHLY  STATEMENT  OF  ACCOUNT 

A  statement  of 
a  ledger  account 
is  a  copy  of  a  cus- 
tomer's account, 
and  also  shows  the 
balance  remaining 
unpaid  on  a  given 
date. 

It  is  a  common 
practice  for  mer- 
chants to  send,  at 
the  close  of  each 
month,  to  each  cus- 
tomer a  statement 
of  his  account. 

The  accompany- 
ing illustration  is 
the  ledger  ac- 
count of  Amos  T.- 
Harmon on  the 
books  of  Austin 
&  Son. 

The  script  illus- 
tration shows  the 

a 


In  account  Wilh 


MODEL    STATEMENT    OF    ACCOUNT 
177 


178  PRINCIPLES  OF  BOOKKEEPING 

monthly  statement  for  May,  which  was  rendered  June  1  ;  below  it  is 
given  the  first  line  of  the  statement  for  the  month  of  June,  which  will 
be  rendered  July  1.  The  first  line  reads  Per  statement  rendered,  and 
this  makes  unnecessary  a  repetition  of  the  debit  and  the  credit  items 
on  the  preceding  statement. 

Exercise  50.    Monthly  Statements  of  Accounts 

For  W'ntti'ii  \\'<n-k 

As  drill  work  for  the  student  he  may  make  monthly  statements  of 
the  accounts  of  any  customers  from  his  own  ledger,  if  one  is  available, 
always  selecting  accounts  in  which  the  debit  side  is  the  larger,  or  he 
may  make  up  ledger  accounts  for  a  few  statements. 

COMPARING  THE  CHECK  BOOK  WITH  THE  MONTHLY 
BANK  STATEMENT 

Observe  the  following  suggestions : 

1.  Arrange  the  canceled  checks  for  the  month  in  the  order  of  their 
numbers. 

2.  Compare   each   canceled   check   with   the   corresponding   stub :   if 
they  agree  as  to  the  number,  the  date,  the  amount,  to  whom  given 
and  for  what  purpose,   place  a  large  check  mark  on  the  stub.    This 
check  mark  indicates  that  the  check  has  been  returned. 

3.  If  all  the  stubs  are  checked,  the  balance  shown  by  the  check  book 
will  agree  with  the  balance  shown  by  the  monthly  bank  statement,  if 
no  other  charges  have  been  made. 

4.  If  the   balances  do  not   agree,   find  the  total   of   the   stubs  not 
checked.     This  sum   should   equal  the   difference   between   the   check 
book  and  the  balance  shown  by  the  monthly  bank  .statement. 

NOTE.  If  at  the  time  of  making  this  comparison  any  oiitstanding  checks  of  a 
previous  month  have  been  returned,  they  must  be  checked  with  the  stubs  from 
which  they  were  detached. 

BILLS  OF  LADING 

As  a  means  of  serving  the  convenience  of  both  the  shippers  and  the 
railway  companies,  the  Interstate  Commerce  Commission  approved  a 
uniform  bill  of  lading,  for  general  use,  June  27,  1908.  This  approval 
applies  to  two  forms  of  the  bill  of  lading  as  follows:  the. straight  bill 
of  lading  and  the  order  bill  of  lading. 

In  this  discussion  only  the  straight  bill  of  lading  is  considered. 


ADDITIONAL  BUSINESS  FORMS 


179 


Uniform  Bill  of  Lading -Standard  form  of  Straight  Bill  of  Udlng  apprevfd  by  the  Interstate  Commerce.  Commission  by  Order  No.  787  of  lone  27,  190» 

THE  COMMERCIAL  TRANSPORTATION  CO. 

Shipper's  No. — 
Agent's  No.  — 


STRAIGHT  BILL  OF  LADING-ORIQINAL-NOT  NEGOTIABLE 


BECEHTED,  subject  to  the  classifications  and  tariffs  in  effect  ou  the  date  of  issue  of  this  Original  BiJl  of  Lading, 


T^T    S/.   Jfc/ 


-the  property  described  below,  in  apparent  good  order,  i 


ept  c 


ntcil 


(contents  and  condition  of  contents  of  packages  unknown),  marked,  consigned  and  destined  as  indicated  below,  which  said  Company  agrees  to  carry 
to  its  usual  place  of  delivery  at  said  destination,  if  on  its  road,  otherwise  to  deliver  to  another  carrier  on  the  route  to  said  destination.  It  is  mutually 
agreed,  as  to  each  carrier  of  all  or  any  of  said  property  over  all  or  any  portion  of  said  route  to  destination,  and  as  to  each  party  at  any  time  inter- 
ested  in  all  or  any  of  said  property,  that  every  service  to  be  performed  hereunder  shall  be  subject  to  all  the  conditions,  whether  printed  or  written. 
herein  contained  (including  conditions  on  back  hereof)  and  which  are  agreed  to  by  the  shipper  and  accepted  for  himself  and  his  assigns. 


The  Rate  of  Freight  from. 


tw 

is  in  fVnt.o  ppr  100  Ihsi 

IF  Sptci.l 

IF  Sprcul 

P«r  

(Mail  address  —  Not  lor  purposes  of  Delivery) 


Destinat 
Route 

Dar  Initial                                                                        C,xr  Nn 

NO. 

PACKAGES 

(Subject  to  Correction) 

RATE 

COLUMN 

If  charges  are  to  be  prepaid,  write 
or  stamp  here,  "  To  be  prepaid-" 

/  O  O 

_£?               ^?j>      •     . 

/  f)  O  O 

/    0   0 

Z-  0  0  0 

Received  % 

to    apply    in    prepayment    of   the 
charges  on  the  property  described 

-fa^^^s-tfL&s^fcL/ 

/ 

Agent  or  Cashier 

(The   signature   here  acknowledge* 

Charges  Advanced  • 

*  - 

-Shipper 


Per. 


Per_ 


(Th is  Bill  of  Lading  Ii  to  be  signed  by  the  shipper  and  agent  of  the  carrier  Issuing  same) 
MODEL   BILL   OF    LADING 

This  model  shows  a  bill  of  lading  made  out  properly  by  the  shipper.  Those  blank 
spaces  which  are  not  filled  out  in  the  model  may  be  tilled  out  by  the  representative  of 
the  railroad,  if  the  circumstances  of  the  particular  shipment  call  for  such  information 

bein<r  shown 


For  use  In  connection  with  the  Standard  form  of  Straight  Bill  of  Lading  approved  by  tht  Interstate  Commerce  Commission  by  Order  No.  787  of  Jxie  27,  19 

THE  COMMERCIAL  TRANSPORTATION  CO. 

ia  an  acknowledgment  that  a  Bill  of  Lading  has  been  issued  and  is  not  the  Original  Bill  of          Shipper's  No._ 
T  H I S    MEMO  RAN  D  U  M     Lading,  nor  a  copy  or  duplicate,  covering  the  property  named  herein,  and  is  intended  solely 
for  Ming  or  record'. Agent's  No.— 


'    RECEIVED,  subject  to  the  cl; 
Original  Bill  of  Lading, 


from 


the  property  described  below,  in  apparent  good  order,  exce 

(contents  and  condition  of  contents  of  packages  unknown),  marked,  consigned  and  destined  as  indicated  below,  which  said  Company  agn 
to  its  usual  place  of  delivery  at  said  destination,  if  on  its  road,  otherwise  to  deliver  to  another  carrier  on  the  route  to  said  destination.  It 
agreed,  as  to  each  carrier  of  all  or  any  of  said  property  over  all  or  any  portion  of  said  route  to  destination,  and  as  to  each  party  at  any 
ested  in  all  or  any  of  said  property,  that  every  service  to  be  performed  hereunder  shall  be  subject  to  all  the  conditions,  whether  printed 
herein  contained  (including  conditions  on  back  hereof)  and  which  are  agreed  to  by  the  shipper  and  accepted  for  himself  and  his  assigns. 


mutually 
me  inter- 
written. 


The  Kate  of  Freight  fron 


»/>                                                                                                                                                                        ia  in  rent*  ppr  100  lh. 

IF  Sp.ei.l 

1  1  

MODKL   MEMORANDUM    (HEADING) 


180  PRINCIPLES  OF  BOOKKEEPING 

For  uie  In  connection  with  the  Slandird  form  of  Straight  Bill  of  Lading  approved  by  the  Interstate  Commerce  Commission  by  Order  No.  787  of  June  27,  1908 

THE  COMMERCIAL  TRANSPORTATION  CO. 

must  be  legibly  filled  in,  in  ink,  in  indelible  pencil,  or  in  carbon,  and  Shipper's  No 

ING   ORDER      retained  by  tie  .gent.  Agent's  No 

RECEIVE,  subject  to  the  classifications  and  tariffs  in  effect  on  the  date  of  issue  of  this  Shipping  Order, 

~        Jf) , 

-  ' 

from ~V^.  Sf~ — s^sL^rf^TZ '^3^7 '^ the  property  described  below,  in  apparent  good  order,  except  as  noted 

(contents  and  condition  of  contents  of  packages  unknown),  marked,  consigned  and  destined  as  indicated  below,  which  said  Company  agrees  to  carry 
to  Its  usual  place  of  delivery  at  said  destination,  if  on  its  road,  otherwise  to  deliver  to  another  carrier  on  the  route  to  said  destination.  It  is  mutually 
agreed,  as  to  each  carrier  of  all  or  any  of  said  property  over  all  or  any  portion  of  said  route  to  destination,  and  as  to  each  party  at  any  time  inter- 
ested in  all  or  any  of  said  property,  that  every  service  to  be  performed  hereunder  shall  be  subject  to  all  the  conditions,  whether  printed  or  written, 
herein  contained  (including  conditions  on  back  hereof)  and  which  are  agreed  to  by  the  shipper  and  accepted  for  himself  and  his  assigns. 


The  Kate  of  Freight  from. 


to                                                                                                                                   la  'n  Cents  per  100  Ib. 

Psptcul 

IF  Sp«ciil 

- 



MODEL    SHIPPING    OUDKR    (HEADING) 

NOT?:.  Bills  of  lading  were  lacking  in  uniformity  until  a  final  decision  of  the 
Interstate  Commerce  Commission  regarding  them  was  secured.  Previous  to  this 
they  were  so  varied  in  size  and  form  as  to  occasion  much  confusion  and  a  conse- 
quent loss  of  time. 

To  obviate  these  difficulties,  business  men  appealed  to  the  Interstate  Commerce 
Commission  to  issue  an  order  that  would  require  a  uniform  bill  of  lading  for  all 
shipments. 

This  request  resulted  in  many  conferences  between  the  shippers,  the  transporta- 
tion companies,  and  the  Commission,  with  the  result  shown  in  the  form  of  the  bill 
of  lading  here  illustrated. 

The  straight  bill  of  lading  is  drawn  up  in  a  set  of  three  papers, 
duplicates  being  made  by  using  carbons,  as  follows:  the  straight  bill 
of  lading,  original;  the  memorandum,  an  acknowledgment  that  a  bill 
of  lading  has  been  issued ;  the  shipping  order.  Tim  form  i»  not  nego- 
tiable, and  must  be  printed  on  white  paper.  The  shipping  order  is 
signed  by  the  shipper  only,  while  the  others  are  signed-  by  both  the 
shipper  and  the  agent  of  the  railway  company.  The  shipping  order 
is  left  with  the  agent;  the  bill  of  lading  is  sent  to  the  purchaser  of 
the  goods ;  the  memorandum  is  retained  by  the  seller.  The  goods  may 
be  delivered  to  the  purchaser  without  his  surrender  of  the  bill  of  lading. 

A  bill  of  lading  is  a  receipt  of  a  transportation  company,  containing 
an  account  of  the  goods  shipped  and  the  conditions  of  shipment. 

As  the  bill  of  lading  is  drawn  up  in  triplicate,  each  party  — the 
shipper,  the  transportation  company,  and  the  consignee  —  has  an  exact 
copy  of  the  receipt. 

Study  the  preceding  model  bill  of  lading  and  answer  the  following 
questions : 

Who  is  the  shipper?  Who  is  the  consignee  of  the  goods  named? 
What  is  done  with  the  original  copy  ?  the  memorandum  ?  the  shipping 
order  ?  By  whom  is  the  bill  of  lading  made  out  ? 


ADDITIONAL   IH'SIXESS   FORMS  181 

KINDS   ()K    NOTES 

Joint  Note.  An  individual  note  is  a  note  in  which  one  person  is 
responsible  for  its  payment.  If  in  such  a  note  the  pronoun  we  were  used 
in  the  body  of  the  note,  instead  of  7,  and  if  it  were  signed  by  Samuel  A. 
Long  and  George  Al.  Watson,  it  would  then  be  a  joint  note  ;  both  of 
the  signers  would  be  responsible  jointly,  not  individually,  for  payment. 

Joint  and  Several  Note.  If  this  same  note  should  read  Ninety  days 
after  date  we  jointly  and  severally  ///•'/ ////.^  t<>  /"///,  and  it  were  signed 
by  Samuel  A.  Long  and  George  M.  Watson,  it  would  then  be  called 
&  joint  and  several  note;  each  party,  individually,  would  be  responsible 
for  its  payment,  or  both  parties,  jointly,  would  be  responsible. 

It  is  a  common  practice  in  business  for  each  member  of  a  partnership 
to  sign  notes  issued  by  the  firm,  thus  making  the  notes  of  a  partner- 
ship joint  notes. 

Interest-Bearing  Note.  If  a  note  bears  interest,  it  must  be  so  stated 
in  -the  note,  and  it  is  excellent  business  practice  always  to  name  the 
rate;  that  is,  instead  of  writing  with  interest,  write  with,  interest  at  or/(. 

If  no  rate  of  interest  is  stated  in  the  body  of  the  note,  the  legal 
rate  is  understood. 

Discount  of  Notes.  Holders  of  notes  often  wish  to  secure  their  pay- 
ment before  they  are  due,  and  many  notes  are  offered  for  discount  at 
banks.  Generally  the  notes  thus  offered  are  non-interest-bearing,  but 
notes  that  bear  interest  may  be  offered  for  discount.  A  person  who 
sells  a  note  to  a  bank  must  indorse  it. 

If  a  note  for  $216.50,  due  Aug.  12,  were  offered  by  the  holder, 
Arthur  T.  Young,  for  discount  on  June  13,  and  it  was  discounted 
by  the  bank,  the  holder  would  receive  the  face  value  of  the  note  less 
the  interest  for  the  time  between  June  13  and  the  maturity  of  the  note, 
Aug.  12,  60  da.  In  journal  form  the  following  would  be  the  entry : 


Cash 
Interest  Paid 


Notes  Receivable 


214.M 

2.17 


210.50 


The  compensation  received  by  the  bank  is  the  interest  on  the  note 
for  the  time  it  has  yet  to  run,  —  60  da. 

If  an  interest-bearing  note  is  discounted  by  a  bank,  the  entry  by  the 
holder  is  not  the  same  as  for  a  non-interest-bearing  note. 

Suppose  you  have  an  interest-bearing  note  dated  March  1,  at  til)  da., 
for  $800,  with  interest  at  6%. 

In  discounting  this  note  the  value  at  maturity,  that  is.  the  face  plus 
the  interest  for  60  da.,  is  the  sum  on  which  the  discount  is  reckoned. 


182 


PRINCIPLES  OF  BOOKKEEPING 


If  tliis  note  is  discounted  March  31,  make  the  following  entry: 


Cash 

Interest  Paid 

Notes  Receivable 
Interest  Earned 


803.96 
4.04 


800 

8 


The  credits  are  the  face  of  the  note  and  the  interest  for  the  full 
time,  —  in  this  note,  60  da.  The  discount,  the  time  from  March  31  to 
April  30  (30  da.),  is  the  period  for  which  the  discount  is  reckoned. 

The  interest  on  $800  for  60  da.  at  6%  is  $8;  the  sum  of  the  face 
of  the  note  and  this  interest  is  $808.  The  interest  on  $808  for  30  da. 
is  $4.04,  and  the  cash  received  by  the  holder  is  $803.96. 


Exercise  51.    Discount  of  Notes 

For  Written  Worl: 
Make  the  proper  entries  for  discounting  the  following  notes : 

1.  A  note  dated  Jan.  1,  at  60  da.,  without  interest,  for  $300.    Dis- 
counted on  Feb.  1,  at  6%. 

2.  A  note   dated  April  1,   at  2  mo.,  with  interest,  for    $600.     Dis- 
counted on  May  2,  at  Q%. 

3.  A    note    dated    June  1,    at    3  mo.,    without    interest,   for    $500. 
Discounted  on  July  24,  at  6%. 

4.  A    note    dated   May  26,   at   30  da.,   without   interest,   for   $250. 
Discounted  on  May  26,  at  6%. 

5.  A  note  dated  March  1,  at  2  mo.,  with  interest,  for  $420.    Dis- 
counted on  April  1,  at  6%. 


PARTIAL  PAYMENTS 

When  a  part   of  the  face  value  of   a  note   is  paid,  it   is   called   a 
partial  payment.    This  amount  is  indorsed  on  the  back  of  the  note. 

ILLUSTRATION.    A  note  for  $1000  for  1  yr.  is  dated  Jan.  1,  1918.    On  the  back 
of  this  note  are  the  following  indorsements  of  partial  payments : 

Received  4/1/18,  $250 
Received  7/1/18, 


The  partial  payments  noted  above  would  be  journalized  as  follows: 


April 
Julv 


<  'ash 


Notes  Receivable 


Cash 


Notes  Receivable 


250 
200 


250 
200 


ADDITIONAL   BUSINESS    FO1LMS 


183 


If  the  Notes  Receivable  account  were  debited  for  SlOOO,  after  posting 
the  preceding  entries  the  account  would  show  the  balance  unpaid. 
The  above  statement  makes  no  reckoning  of  the  interest  whatsoever. 

Exercise  52.     Partial  Payments 

For   irrittm   \Vorl; 

Indicate   the    correct   indorsement,   and  make   the  proper  entry  for  the 
following  partial  payment*  : 

1.  A  note  for  $750  for  1  yr.  was  dated  March  1,  1918.    The  follow- 
ing payments  were  made  on  this  note:    June  1,  1918,   $225;  Sept.  1, 
1918,  |150;  Nov.  1,  1918,  $200. 

2.  A   note   for    $800    for    10  mo.    was    dated    Feb.  16,    1918.      The 
following   payments   were    made    on   this   note:     May  1,    1918,    $250; 
Aug.  10,  1918,  $300;    Oct.  1,  1918,  8150. 


RENEWAL  OF  XOTES 

The  renewal  of  notes  is  common  in  business.  A  man  borrows  a  sum 
of  money  and  issues  his  note.  When  this  note  becomes  due,  if  he 
lacks  -funds  to  pay  it,  he  may  issue  a  new  note  for  the  original  one 
and  pay  the  interest  on  the  original  note  in  cash.  AVhen  the  original 
note  was  issued,  the  borrower  would  make  the  following  entry:1 


Jan.       1  Gash 

Notes  Payable  200 

Borrowed  of  the  First  National 
Bank  the  sum  of  §200,  and  gave 
my  note  at  2  mo.,  with  interest. 


When  the  new  note  is  issued  he  would  make  the  following  entry: 

Mar.      1  Notes  Payable  200 

Notes  Payable  200 

Note  at  2  mo.,  with  interest, 
given  to  the  First  National  Bank 
to  cancel  the  note  of  Jan.  1. 

The  original  note  should  be  marked  Paid  in  the  notebook. 

By  this  entry  and  record  the  books  show  that  the  original  note  has 
been  disposed  of  and  the  new  note  has  been  entered  as  a  complete  and 
independent  record.  . 

1  If  interest  is  paid  in  advance,  this  entry  would  be  modified. 


184  PRINCIPLES  OF  BOOKKEEPING 

If  a  partial  payment  had  been  made  on  the  original  note,  the  new 
note  would  be  issued  for  the  balance  remaining  unpaid. 

Some  bookkeepers  mark  the  original  note,  in  the  notebook,  as  re- 
newed and  do  not  make  any  entry  or  additional  record  for  the  new 
note.  This  practice  is  open  to  the  objection  of  making  one  note  of  a 
given  date  the  record  of  another  note  of  a  different  date.  If  a  partial 
payment  had  been  made  on  the  original  note,  the  practice  of  marking 
it  as  renewed  is  open  to  a  still  more  serious  objection ;  that  is,  the  face 
of  the  new  note  is  not  the  same  as  in  the  original  note. 

TRADE  DISCO UXT 

Trade  discount  is  a  discount  allowed  from  the  published  catalogue 
and  list  price  which  enables  a  concern  to  change  the  selling  price  by 
altering  the  trade  discount  rather  than  by  changing  the  published  price. 
Trade  discount  usually  is  deducted  before  the  invoice  cost  is  entered 
in  the  books.  To  illustrate,  the  list  price  of  an  article  may  be  $25, 
less  a  trade  discount  of  60%,  10%,  and  5%.  The  actual  invoice  cost,  the 
amount  at  which  it  is  entered  in  the  books,  is  $8.55,  obtained  as  follows: 
$25  (list  price)  less  60%  =$10;  $10  less  10%  =$9;  $9  less  5%  = 
$8.55,  the  selling  price  of  the  article. 

If  it  became  necessary  to  increase  the  selling  price  to  $9,  the  list 
price  of  $25  may  be  retained,  but  the  percentages  of  the  trade  discount 
changed  to  60%  and  10%. 

Exercise  53.    Discounts 

For  Written  Work 

1.  The  catalogue  price  of  an  article  is  $50 ;    the  trade  discount  is 
40%,  20%,  10%,  and  5%.    What  is  the  invoice  cost? 

2.  What  would  be  the  invoice  cost  of  the  article  in  problem  1  if  the 
trade  discount  were  changed  to  40%,  20%,  5%,  and  21  %? 

3.  The  trade  discount  allowed  on  an  article  listed  at  $6.50  is  75%, 
20%,  10%,  2%,  and  J%.    What  is  the  invoice  cost  of  the  article? 

4.  What  would  be  the  invoice  cost  of  the  article  in  problem  3  if  the 
trade  discount  were  changed  to  75%,  20%,  10%,  and  5%? 

Merchandise  discount,  allowed  on  an  invoice  for  payment  within  a  specified  time, 
should  not  be  confused  with  trade  discount.  If  both  trade  discount  and  merchandise 
discount  were  allowed  upon  a  purchase,  the  merchandise  discount  is  calculated  upon 
the  invoice  cost,  after  the  trade  discount  has  been  deducted. 

5.  What  would  be  the  merchandise  discount  in  problem  1  if  the  terms 
were  3/10,  and  the  invoice  were  paid  within  the  specified  10  da.  ? 


CHAPTER  XVII 

COMMERCIAL  DRAFTS  (CONTINUED) 

Sight  Drafts.  On  preceding  pages  sight  drafts  are  discussed.  Be- 
cause of  their  importance  a  review  of  those  pages  is  suggested,  and 
then  the  following  exercises  may  be  worked  out. 

Exercise  54.    Review  of  Sight  Drafts 
For  Written  Work 

1.  On  May  6  you  drew  a  sight  draft  on  Warren  &  Son,  in  your  own 
favor,  for  $325. 

a.  Make  your  entry  and  the  necessary  explanations.  It  is  assumed 
that  the  draft  was  paid  when  presented.  Make  Warren's  entry. 

2.  On  May  10  you  drew  a  sight  draft  on  Patterson  &  Co.,  Atlanta, 
Ga.,  for  an  invoice  dated  May  1,  for  $  165. 20,  in  favor  of  yourself, 
and  left  it  at  your  bank  for  collection. 

a.  Write  the  draft.    Show  the  necessary  indorsement. 

b.  Make  the  entry  for  each  person  when  the  draft  is  collected. 

3.  On  May  15  you  sold  an  invoice  of  merchandise  to  Geo.  II.  Powell, 
Cleveland,   Ohio,  amounting  to    $125.50,   subject   to  a  sight   draft   in 
10  da.    On  May  24  you  left  the  draft  at  your  bank  for  collection. 

a.  Trace  the  course  of  this  draft  until  it  is  paid.    Write  the  draft. 

b.  Make  your  entry  when  your  bank  reports  that  it  has  collected 
the  amount  of  the  draft. 

c.  Make  Powell's  entry  when  he  paid  the  draft. 

4.  On  May  20  you  bought  an  invoice  of  goods  of  Thos.  H.  Head, 
Omaha,  Nebr.,  amounting  to  $450,  subject  to  a  sight  draft  in  10  da. 
On  May  31  A.  A.  Lewis,  of  your  city,  presented  a  sight  draft  drawn 
on  you,  in  his  favor,  by  Thos.  H.  Head,  for  the  amount  of  the  invoice. 
The  draft  was  paid  by  a  check  on  The  Union  Bank. 

a.  Write  the  check. 

b.  Write  the  draft,  and  make  the  entry  for  eacli  person. 

If  a  sight  draft  was  presented  to  the  drawee,  and  payment,  by  request,  was  de- 
ferred for  a  number  of  days,  it  would  be  proper  for  him  to  accept  the  draft.  After 
acceptance  the  sight  draft  may  be  treated  as  a  time  draft.  Some  states  allow  '•>  da. 
of  grace  on  sight  drafts. 

185 


186  PRINCIPLES  OF  P.OOKKEEP1NG 

Three-Party  Time  Drafts.    The  following  is  an  illustration  of  a  time 
draft  having  three  parties,  and  the  required  entry  for  each  party: 


Value  receioed  and  chajge  tQ\account  of 
<Uo 


Method  of  Procedure  in  Handling  this  Draft.  The  drawer  writes  the 
draft  and  mails  it  to  the  payee,  who  presents  it  to  the  drawee  for 
acceptance.  In  the  foregoing  draft  the  date  of  maturity  was  not 
determined  by  the  acceptance  of  E.  W.  Masten,  and  it  was  not  ab- 
solutely necessary  for  William  M.  McKay  to  present  the  draft  until 
it  was  due,  and  then  only  for  payment ;  until  the  draft  is  accepted, 
there  is  no  legal  obligation  on  the  part  of  Masten  to  pay  it,  so  it  would 
be  unbusinesslike  on  the  part  of  McKay  not  to  present  the  draft  for 
acceptance  within  a  reasonable  time  after  it  was  received. 

When  the  foregoing  draft  is  presented,  Masten  is  not  bound  to 
accept  it.  However,  if  he  does  accept  it,  he  is  held  for  its  payment  the 
same  as  if  he  had  written  his  promissory  note  for  the  amount. 

Manner  of  Accepting.  If  the  drawee  is  willing  to  meet  a  draft  on  him 
according  to  the  conditions  named  therein,  he  writes  the  word  Accepted 
and  signs  his  name.  This  is  generally  done  in  red  ink  across  the  face 
of  the  draft,  though  the  color  of  the  ink  has  no  particular  significance. 

In  those  states  that  allow  days  of  grace  on  sight  drafts  it  is  necessary  to  have 
them  accepted  in  the  same  manner  as  time  drafts  payable  after  sight,  unless  they 
are  paid  upon  presentation. 

To  honor  a  sight  draft  is  to  pay  it ;  to  honor  a  time  draft  is  to  accept  it  or  to  prepay  it. 

Analysis  of  Entries  of  Parties  to  a  Time  Draft.  Compare  the  foregoing 
draft  with  the  sight  draft  previously  explained.  Osgood  &  Co.  owe 
McKay,  and  Masten  owes  Osgood  &  Co.  It  is  expected  that  Masten 
will  accept  the  draft  when  it  is  presented  to  him  by  McKay. 

Drawers'  Entry.  1.  F.  V.  Osgood  &  Co.  have  given  William  M .  McKay 
value  which,  when  accepted  by  E.  W.  Masten,  is  the  same  as  Notes 
Receivable.  Therefore  they  should  debit  McKay. 


COMMEHCIA  L   DRAFTS 


187 


2.  When  Masten  accepts  the  draft,  lie  binds  himself  to  pay  one  of 
Osgood  &  Co.'s  debts.  He  is  expected  to  honor  the  draft,  and  Osgood 
&  Co.  should  therefore  credit  him,  because  by  accepting  the  draft  he 
cancels  a  debt  to  the  amount  of  |320.64. 


32-0 


32-0 


V.    V      OSCiOOD    A    CO.'S    .TOl'KXAI,     ENTRY 


Payee's  Entry.  1.  The  payee,  William  M.  McKay,  instead  of  receiving- 
cash,  as  in  the  case  of  the  sight  draft,  has  received  simply  E.  W. 
Masten's  written  promise  to  pay  on  a  certain  date.  We  have  already 
learned  that  other  people's  written  promises  are  debited  to  Notes  Receiv- 
able when  received. 

2.  As  in  the  case  of  the  sight  draft,  F.  V.  Osgood  &  Co.  are  respon- 
sible for  McKay's  getting  the  draft,  and  he  should  credit  them. 


WILLIAM    M.    MCKAYS    JOl'KXAI,    KXTUY 


Drawee's  Entry.  1.  When  E.  W.  Masten  has  accepted  the  foregoing 
draft,  he  has  given  the  equivalent  of  his  promissory  note,  and  when  one 
issues  his  promissory  note  he  credits  Notes  Payalle. 

2.  It  is  for  F.  V.  Osgood  &  Co.  that  Masten  has  promised  to  be 
bound  by  this  draft ;  therefore  he  should  debit  them. 


E.  w.  MASTEN'S  JOURNAL  ENTRY 


188 


PRINCIPLES  OF   BOOKKEEPING 


Draft  Payable  after  Sight.  The  entries  for  the  following  draft,  after 
acceptance,  are  the  same  as  the  draft  that  is  payable  after  date,  but 
the  acceptance  must  be  dated : 


2-n,  19 


'Pay  to  the  order  of 


Principles  for  Time  Drafts.  From  the  preceding  discussion  of  this 
subject  the  following  general  principles  for  entries  for  time  drafts  are 
deduced  : 

1.  The  drawer's  entry  when  a  time  draft  with  three  distinct  parties 
is  accepted  is  as  follows : 

Payee  Drawee 

2.  The  drawer's  entry  when  he  receives  his  draft,  drawn  in  his  own 
favor,  accepted,  is  as  follows: 

Notes  Receivable  Drawee 

3.  The  payees  entry  when  he  receives  a  time  draft  properly  accepted 
is  as  follows : 

Notes  Receivable  Drawer 

4.  The  drawees  entry  when  he  accepts  a  time  draft  is  as  follows: 

Drawer  |  Notes  Payable 

5.  The  drawer's  entry  when  he  draws  a  time  draft  on  a  second  party 
in  favor  of  himself,  and  the  drawee,  instead  of  accepting  it,  prepays  it 
in  cash,  is  as  follows : 

Cash  Drawee 

Interest  Paid 

6.  The   drawee's   entry  when  he  prepays  a  time   draft,  in  cash,  in- 
stead of  accepting  it,  is  as  follows: 

Drawer  Cash 

Interest  Earned 


COMMERC I AL  I )  1 1 AFTS 


189 


Value  received  and  charge  to  account  of 


Another  Use  of  Time  Drafts.     The  ordinary  time  draft  is  sometimes 
used  in  connection  with  sales  of  merchandise.    For  instance,  Quincy, 
Bradley  &  Co.  sell  L.  B.  Wade  &  Co.  merchandise  amounting  to  $1305 
on  the  following  terms:   30-day  draft  for  S;">00,  balance  in  GO  da. 
A  draft  similar  to  the  above  is  mailed  with  the  bill : 
The  object   of   drawing   a   time    draft    in    connection   with    a   sale   of 
merchandise  is  twofold : 

1.  When  accepted,  the  draft  serves  as  a  written  contract. 

2.  Since  an  acceptance  is  negotiable,  it  may  be  discounted  and  cash 
realized  upon  it  before  maturity. 

Necessary  Entries  for  this  Time  Draft.  The  sale  will  be  recorded 
in  the  sales  book.  The  entry  will  be  made  when  the  draft  is  returned 
accepted. 

If  this  draft  is  discounted  July  20,  the  date  it  is  assumed  they 
received  it  from  L.  B.  Wade  &  Co.  accepted,  Quincy,  Bradley  &  Co. 
will  make  the  following1  cashbook  records: 


I.KFT    SIDK 


RIGHT    SIDE 

NOTE.    Some  business  men  prefer  two  distinct  entries  for  the  above,  as  follows : 

1.  Notes  Receivable  to  L.  B.  Wade  if  Co.  for  the  acceptance  received. 

2.  Notes  Receivable  on  the  left  side  of  the  cashbook,  $500,  and  I,,t<-r<:<t  J'(n>!  on 
the  right  side  for  $2.08,  when  the  acceptance  was  offered  for  discount. 

The  making  of  the  two  distinct  entries  is  recommended. 


190  PKIXCIPLES  OF   IJOOKKEKPIXG 

Exercise  55.    Time  Drafts 

For  Written  U'url: 
SUGGESTION.    These  exercises  may  be  used  first  orally. 

1.  On  June  1  W.  G.  (fambee,  Denver,  Colo.,  drew  on  you  at  45  days 
sight,  in  favor  of  Fred  G.  Mercier,  of  your  city.    Upon  presentation, 
June  5,  you  accepted  the  draft.    Face  of  the  draft,  $500. 

a.  Write  the  draft  and  the  acceptance. 

b.  Make  the  entry  for  each  person. 

2.  You  bought  of  R.  H.  Macey  &  Co.,  New  York,  750  yd.  Scotch 
ginghams  at  15  0,  and  received  their  30-day  draft  dated  June  4.    This 
you  accepted  on  June  6,  for  the  amount  of  the  invoice. 

a.  Write  the  draft  and  your  acceptance. 

b.  Make  your  entry  for  the  draft. 

c.  Make  R.  H.  Macey  &  Co.'s  entry  when  they  received  the  draft 
accepted. 

In  the  above  it  is  assumed  that  R.  II.  Macey  &  Co.  made  one  entry  in  their 
sales  book  at  the  time  of  shipping  the  goods,  and  another  on  the  receipt  of  your 
acceptance ;  also  that  you  entered  the  invoice  in  your  purchase  book,  and  made  a 
journal  entry  when  the  draft  was  accepted. 
i 

3.  You  owed  D.  E.  Smith,  Seattle,  Wash.,  $275,  due  in  30  da.,  and 
F.  C.  Kirkman,  of  Seattle,  owed  you  $426.50,  on  account.    You  wrote  a 
draft  payable  30  da.  after  date,  and  sent  it  to  Smith ;  he  presented  the 
draft  to  Kirkman,  who  accepted  it.    This  canceled  your  debt  to  Smith. 

a.  Show  the  proper  acceptance  on  the  draft. 

b.  Make  the  entry  for  each  person. 

4.  S.  C.  Davis,  St.  Louis,  Mo.,  owed  you  $500,  due  in  30  da.    You 
needed  the  money  at  once,  and  drew  a  30-day  sight  draft  on  him,  in 
favor  of  yourself,  and  sent  it  to  him.    He  accepted  it  and  returned  it 
to  you.    The  draft  was  dated  June  16,  and  the  acceptance,  June  18. 

a.  Write  the  draft  and  show  the  acceptance. 

b.  Make  the  entry  for  each  person. 

5.  You  drew  a  draft  payable  30  da.  after  date  on  Frank  H.  Wilson, 
Trenton,  N.J.,  in  favor  of  yourself,  for  an  invoice  dated  July  1,  for 
$210.50,  and  left  it  at  the  Traders  National  Bank  for  collection.    The 
bank  presented  the  draft,  and  it  was  duly  accepted.    At  maturity  the 
Traders  National  Bank  collected  the  draft,  deducted  25  £  for  charges, 
and  remitted  the  balance  to  you. 

a.  Write  the  draft  and  the  indorsement.    Show  Wilson's  acceptance 
and  entry. 


COMMEBC1 A L    I )  1  { A  FTS  191 

b.  Make  your  entry  when  notified  that  the  draft  had  been  accepted. 

c.  Make  your  entry  when  you  received  the  remittance. 

6.  You  drew  a  draft  payable  10  da.  after  date  on  James  B.  Stillman, 
Louisville,  Ky.,  in  favor  of  yourself,  for  foOO,  and  sent  it  to  Stillmaii 
for  acceptance.  The  draft  is  dated  July  (i,  and  the  acceptance,  July  9. 
He  returned  the  draft,  and  you  held  it  until  it  was  paid  at  maturity. 

a.  Write  the  draft, 

b.  Show  the  acceptance. 

c.  Make  the  entry  for  each  person  after  acceptance. 

d.  Make  the  entry  for  each  person  at  the  time  of  payment. 

Exercise  56.    Review  of  Time  Drafts 

For  Written  Work 

1.  Paid  by  check  Arthur  S.  Harrington's  sight  draft  on  you,  dated 
Birmingham,  Ala.,  Aug.  5,  in  favor  of  Horace  ('.  Nelson,  of  your  city, 
for  $425. 

a.  Write  the  draft  and  the  check. 

b.  Make  the  entry  for  each  party. 

2.  On  Feb.  2  Roger  P.  Mills,  Oakland,  Cal.,  accepted  your  draft  at 
60  clays  sight,  dated  Jan.  29,  in  favor  of  yourself,  for  $900.    The  draft 
is  payable  at  Alliance  National  Bank. 

a.  Write  the  draft  and  show  the  acceptance. 

b.  Show  the  maturity  of  the  draft. 

c.  Make  the  entry  for  each  person  when  the  draft  was  accepted. 

d.  Make   the   entry   for   each   person    when    the    draft   was    paid    at 
maturity. 

NOTE.  When  the  time  of  a  note  or  a  draft  is  expressed  in  mouths,  calendar 
months  (that  is,  without  regard  to  the  exact  number  of  days  in  each  month)  are 
used  to  determine  the  date  of  maturity;  but  when  the  time  is  expressed  in  days, 
the  exact  number  of  days  is  used. 

A  note  or  a  draft  due  two  months  from  date  matures  on  the  corresponding  day 
of  the  second  following  .month,  provided  there  is  a  sufficient  number  of  days  in 
that  month  to  make  this  possible.  If  there  is  not,  it  is  due  on  the  last  day  of  that 
particular  month. 

EXAMPLE.  Notes  and  drafts  dated  Jan.  28,  29,  -50,  or  .'51,  and  payable  one  month 
after  date,  would  each  mature  on  Feb.  28,  except  in  leap  year;  but  if  payable  ;>(>  da. 
after  date,  they  would  be  due  Feb.  27,  28,  and  March  1  and  2,  respectively. 

In  most  states  the  added  day  for  leap  years  is  not  counted.  For  example,  a  note 
or  a  draft  payable  30  da.  after  Feb.  25  in  any  leap  year  is  due  March  27,  instead  of 
March  26,  as  would  be  the  case  if  the  extra  day  were  counted. 

It  is  suggested  that  some  member  of  the  class  should  consult  a  local  banker  on 
these  points,  and  then  report  to  the  class. 


192  PRINCIPLES  OF  BOOKKEEPING 

3.  On  Feb.  1  you  sold  F.  B.  Norton,  Buffalo,  X.Y.,  on  his  acceptance 
at  60  da.,  150  doz.  cotton  hose  at  $2.50.    The  draft  drawn  on  the  date 
of  the  sale,  payable  60  da.  after  date,  was  received,  accepted,  011  Feb.  5. 

a.  Write  the  draft  and  show  the  acceptance. 

b.  Make  your  entry  for  the  draft. 

4.  On  Feb.  6  you  bought  of  the  Mechanics  National  Bank,  by  check,  a 
draft,  No.  7521,  on  the  Puritan  National  Bank,  New  York  City,  for 
$96.24,  and  remitted  it  to  S.  G.  Metzer  &  Co.,  Cincinnati,  Ohio,  in  full 
of  account.    Exchange  on  draft,  10<£. 

a.  Write  a  check   on   the   Mechanics   National   Bank   to   cover  the 
draft  and  the  exchange. 

b.  Write  the  New  York  draft.    A.  Turner,  Cashier. 

c.  Make  your  entry. 


CHAPTER  XVIII 

SET   V.     JOBBING   FURNITURE   BUSINESS 
OPEXIX(i    DorULK-EXTKY    HOOKS 

The  ability  to  open  a  set  of  books  is  of  special  importance  to  every 
student  of  bookkeeping. 

When  business  is  begun  with  a  simple  cash  investment,  as  has  fre- 
quently been  illustrated  in  the  earlier  pages  of  the  text,  the  entry  is 
easily  understood. 

In  the  present  illustrative  examples  both  assets  and  liabilities  are 
used  at  the  time  the  books  are  opened ;  hence  it  is  well  to  state  the 
principle  which  governs  in  these  opening  entries,  as  follows : 

Debit  each  asset,  under  its  appropriate  name,  and  credit  the  Proprietor 
for  the  total  assets. 

Credit  each  liability,  under  its  appropriate  nnme,  and  del>it  the  Proprietor 
for  the  total  liabilities. 

The  student  is  requested  to  give  special  attention  to  the  following 
exercise,  as  it  illustrates  the  opening  entries  that  will  be  used  in 
subsequent  sets. 

The  following  example  illustrates  the  opening  of  double-entry  books 
when  the  Proprietor  begins  business  with  both  assets  and  liabilities: 

W.  D.  Fain  began  the  Jobbing  Furniture  business  July  1,  with  the 
following  assets  and  liabilities : 

Cash  in  drawer,  $2500 
Merchandise,  stock  on  hand.  81600 
Jas.  R.  Milem's  note,  8500 
Real  Estate,  store  lot,  $  1000 
Building  and  Fixtures,  inventory.  84000 
Delivery  Equipment,  inventory,  $325 
Office  Furniture,  inventory,  $260 
The  following  owed  him  on  account : 

Wm.  K.  Duffy,  $1240 

F.  E.  Bush,  $400 

C.  O.  Bond,  $300 
He  owed  the  following  on  account : 

Ralph  Dewey,  $400 

Arthur  Lehan,  $1600 

His  note  in  favor  of  Chas.  B.  Hawley.  $1387 
193 


194 


PKINCIPLES  OF  BOOKKEEPING 


The  following  is  the  entry  for  these  assets  and  liabilities: 
Madison,  Wis.,  Julv  1,  19— 


I,  W.  D.  Fain,  have  this   day  begun  : 
the  Jobbing  Furniture  business  with  the 
following  assets  and  liabilities  : 

C.  B. 

Cash 

2500 

Notes  Receivable 

500 

Win.  K.  Duffy 

1240 

F.  E.  Bush 

400 

C.  O.  Bond 

300 

Mdse.  Inventory 

1600 

Real  Estate 

1000 

Building  and  Fixtures 
Office  Furniture 

4000 
260 

Delivery  Equipment 

325 

W.  D.  Fain,  Investment 
To  credit  the  amount  of  these  assets 

12125 

to  W.  D.  Pain's  Investment  account. 

W.  D.  Fain,  Investment 

3387 

Notes  Payable 
Ralph  Dewey 
Arthur  Lehan 

1387 
400 
1600 

To  debit  the  amount  of  these  liabili- 

ties to  If.  D.  Fain's  Investment  account. 

The  cash  item  should  also  appear  on  the  left  side  of  the  cashbook 
as  follows: 


July 


.1. 


W.  D.  Fain 


Investment 


2500 


NOTE.  The  cash  item  is  checked  C.B.  in  the  journal  because  it  has  been  placed 
to  the  debit  of  the  Cash  account  by  the  above  record. 

W.  D.  Fain's  Investment  account  has  been  checked  ,/.  in  the  cashbook  because 
this  item  has  been  counted  in  determining  the  total  assets  in  the  journal. 


Exercise  57.   Opening  Double-Entry  Books 
For  Written  Work 

On  a  sheet  of  journal  paper  or  on  paper  ruled  in  journal  form  make 
entries  for  the  following  : 

1.  Chas.  R.  Osgood  began  the  Furniture  business  July  1,  with  the 
following  assets  and  liabilities: 


SET  V.    JOBBING    FURNITURE  BUSINESS  195 

Cash  in  drawer,  §1700 
Deposit  in  The  Union  Hank,  S'.)54.20 
Chas.  R.  Dean's  note,  §500 
Merchandise,  stock  on  hand,  82(500 
The  following  owed  him  on  account  : 

A.  B.  Knowlton,  81200 

George  K.  Brown,  §150 
He  owed  the  following  on  account : 

Foster,  Hills  &  Co.,  §250 

Traver,  Bowe  &  Co.,  8300 
His  note  in  favor  of  M.  B.  llanwuy,  §600 

2.  James  B.  Ellis  began  business  July  1,  with  the  following  assets 
and  liabilities : 

Cash  in  drawer,  §2000 
Deposit  in  The  Union  Bank,  8870.45 
Merchandise,  stock  on  hand,  $1300 
F.  M.  Everett's  note,  S 1200 
Office  Furniture,  inventory,  §130 
Delivery  Equipment.  1  auto  truck,  §650 
Real  Estate,  lot  at  1625  Main  St.,  $900 
Building  and  Fixtures,  inventory,  §3600 
The  following  owed  him  on  account : 

E.  T.  Rose,  §145.60 

M.  M.  Parsons,  §236.75 
Daniel  F.  Mack's  note,  §425 
He  owed  the  following  on  account : 

Geo.  L.  Works,  $212 

A.  C.  Moore,  $87.65 
His  note  in  favor  of  H.  C.  Baker,  §250 

3.  Howard  A.   Johnson  began  business  July   1,   with   the   following 
assets  and  liabilities : 

Cash  in  drawer,  $1750 
Deposit  in  The  Union  Bank,  $1278.50 
Merchandise,  steck  on  hand,  §3875.40 
He  held  notes  against  the  following : 

John  S.  Gray,  $625 

A.  S.  Coleman,  $450 
Real  Estate  valued  at  $1000 
Building  and  Fixtures,  inventory,  §4000 
His  note  in  favor  of  \V.  A.  Brown,  $516.50 
He  owed  the  following  on  account : 

Samuel  B.  Lewis,  $265 

French  &  Co.,  $376.40 
Office  Furniture,  inventory,  $130 


196 


PRINCIPLES  OF  BOOKKEEPING 


PRELIMINARY  EXPLANATIONS 

Object  of  the  Set.  This  set  is  designed  to  illustrate  the  Jobbing 
Furniture  business.  A  variety  of  advanced  business  forms  is  illustrated 
and  explained,  and  a  new  book  of  record  is  used.  The  transactions 
deal  largely  with  commercial  paper,  and  the  actual  handling  of  money 
is  avoided  as  far  as  possible.  Notes,  drafts,  and  acceptances,  and  the 
relations  existing  between  the  parties  connected  therewith,  are  made  a 
prominent  feature  of  the  work. 

Books  Used.  In  addition  to  the  books  with  which  the  student  is 
already  familiar,  the  notebook  is  introduced. 

Notebook.  This  book  is  used  for  recording  memoranda  regarding 
all  notes  or  acceptances  which  are  received  by  the  business,  or  which 
are  issued  by  the  business.  It  is  generally  divided  into  two  parts,  one 
for  notes  receivable  and  the  other  for  notes  payable.  When  notes  or 
acceptances  are  received  or  issued,  a  full  description  of  the  paper 


NOTES 


No. 

DRAWEE  OK  MAKER 

DRAWER  OK 
INDORSER 

FOR  WHAT 
RECEIVED 

WHERE 
PAYABLE 

DATE 

Received 

Drawn 

1 

J.  B.  Maxwell 

On  account 

Union  Bank 

July 

1 

June 

30 

2 

W.  D.  Rimbach 

J.  B.  Topham 

On  account 

Union  Bank 

1 

9 

3 

Walker,  Brown  &  Co. 

Student's  name 

Inv.  July  8 

July 

8 

NOTES 


No. 

To  WHOM  PAYABLE 

FOR  WHOSE 
ACCOUNT 

FOR  WHAT 
ISSUED 

WHERE 
PAYABLE 

DATE 

Accepted 

Drawn 

1 

Allen  &  Bailey  Furn.  Co. 

In  full  of  acct. 

Union  Bank 

June 

•_'.-> 

2 

C.  O.  Boswell 

C.  O.  Boswell 

In  full  of  acct. 

Union  Bank 

June 

25 

20 

3 

Derby  Mfg.  Co. 

Derby  Mfg.  Co. 

Inv.  July  9 

Union  Bank 

July 

<t 

July 

9 

MODEL    NOTEBOOK,    SET    V    (LEFT-HAND    PAGE) 


SET  V.   JOBBING  FURNITURE  BUSINESS 


197 


should  be  recorded  in  the  notebook.  This  book  should  exhibit  the 
same  balances  as  the  Notes  Receivable  and  the  Notes  Payable  accounts 
in  the  ledger. 

The  model  notebook  given  below  is  self-explanatory.  Care  should  be 
taken  to  record  in  the  proper  columns  the  information  called  for.  Com- 
plete records  for  the  first  three  notes  receivable  and  notes  payable  for 
the  month  of  July  are  properly  entered  in  this  model. 

NOTE.    The  amounts  in  the  model  notebook  are  for  price  list  No.  1  (page  200). 

Purchase  Book.  All  invoices  of  goods  purchased  will  be  recorded  in 
the  purchase  book. 

Record  each  invoice  when  received,  always  at  its  face  value,  as  no 
discount  allowances  will  appear  on  the  invoice  itself,  and  then  file  the 
bill  in  the  filing  envelope.  On  the  outside  of  this  envelope  full  instructions 
are  printed. 

The  closing  and  the  posting  will  be  explained  at  the  end  of  July. 

RECEIVABLE 


TIME 

DATE 
DUE 

AMOUNT 

DATE 
DIS- 

DATE 

SIC  NT  TO 

DATE 
PAID 

IIo\v    PAID 

| 
REMARKS 

COUNTED 

COLLECT 

Int. 

20  da. 

July 

20 

500 

July 

18 

July 

20 

Paid  at  bank 

30  da. 

9 

450 

8 

9 

Paid  at  bank 

30  da. 

Aug. 

7 

883 

8 

Aug. 

8 

Paid  at  bank 

PAYABLE 


TIME 

DATE 
DUE 

AMOUNT 

DATE 
PAID 

How  PAID 

REMARKS 

1  mo. 

July 

25 

Int. 
2500 

July 

25 

By  check 

30  da.  sight 

25 

1000 

25 

By  check 

10  da.  sight 

19 

1376 

90 

19 

By  check 

MODEL    NOTEBOOK,    SET    V    (RIGHT-HAND    PAGE) 


198 


PRINCIPLES  OF  BOOKKEEPING 


Cashbook.  In  the  cashbook  for  this  set  (see  below),  columns  are 
provided  on  the  debit  side  for  Net  Cash,  I)iscount  oti  Sales,  Accounts 
Receivable,  and  General.  All  cash  received  is  entered  in  the  Net  Gash 
column ;  if  the  amount  is  not  for  merchandise  sold,  extend  the  amount 
to  the  G-eneral  column ;  if  the  amount  is  for  merchandise  sold,  the 
discount  on  the  invoice  is  entered  in  the  Discount  on  Sales  column  ;  then 
the  sum  of  the  net  casli  and  sales  discount  is  entered  in  the  Accounts 
Receivable  column. 

Columns  are  provided  on  the  credit  side  for  Net  Cash,  Discount  on 
Purchases,  Accounts  Payable,  and  G-eneml.  All  cash  paid  is  entered  hi 
the  Net  Cash  column ;  if  the  amount  is  not  for  merchandise  purchased, 
extend  the  amount  to  the  Greneral  column  ;  if  the  amount  is  for  mer- 
chandise purchased,  the  discount  on  the  invoice  is  entered  in  the  Dis- 
count on  Purchases  column  ;  then  the  sum  of  the  net  cash  and  purchase 
discount  is  entered  in  the  Accounts  Payable  column. 

When  proving  cash,  use  only  the  Net  Cash  column  on  either  side. 

This  is  a  self-balancing"  cashbook,  as  the  sum  of  the  first  and  second  columns 
on  either  side  should  equal  the  sum  of  the  third  and  fourth  columns. 

Post  all  amounts  from  the  Accounts  Receivable,  Accounts  Payable,  and 
G-eneral  columns  in  the  usual  manner. 


Casli  Received,  July,  19- 


Date 


July 


Aug. 


J.  H.  Sampson    Investment 


J.  E.  Bender 
C.  W.  Gray 
Notes  "Rec. 
Int.  Earned 
C.O.D.  Accts. 
J.  0.  Brown 


Balance 


Inv.  7/7,  less  3% 
Inv. 7/5 
Morgan's  note 
On  above 
C.  B.  Moore 
Inv.  6/12,  less  1  % 


In  bank 


Net 
Cash 


6000 

1169 

1240 

560 


50 
1247 


10272 


3667 


60 


-lo 


I'.i 


0!) 


Disc,  on 

Sales 


36 


12 


16 


80 


Accts. 
Rec. 


1205 
1240 


50 
1260 


3755 


General 


6000 


560 
5 


6565 


3667 


60 


LEFT-HAND  PAGE  OF  CASHBOOK,  SET  V 


SET  V.    JOBBING  FURNITURE  BUSINESS 


199 


Under  Cash  Received  post  the  total  of  the  Net  Cash  column  to 
the  debit  of  Cash  in  the  ledger,  and  the  footing  of  the  Discount  on 
Sales  column  to  the  debit  of  Merchandise  Discount  on  Sales  in  the 
ledger. 

Under  Cash  Paid  post  the  total  of  the  N<-t  Cash  column  to  the 
credit  of  Cash  in  the  ledger,  and  the  total  of  the  Discount  on  Purchases 
column  to  the  credit  of  Merchandise  l)i*<-oiuit  on  Purchases  in  the  ledger. 

The  figure  in  the  circle,  just  below  tin;  column  footing,  indicates  the  ledger  folio. 

When  the  cash  balance  is  carried  forward  for  a  succeeding  month, 
enter  it  in  the  Net  Cash  and  General  columns,  under  Ca*h  Received,  and 
draw  a  light  line  underneath  the  amount  in  each  column.  This  balance 
must  be  used  in  proving  cash,  but  it  must  not  be  used  in  footing  either 
the  Net  Cash  or  the  G-eneral  columns. 

Selling  Price  Lists.  Twenty-five  selling  price  lists  are  available  for 
this  set,  and  each  one  may  be  used  in  connection  with  the  business 
forms,  whether  business  practice  is  used  or  not.  (See  pages  200-203.) 

Let  the  instructor  assign  to  each  student  a  price  list,  and  if  business 
practice  is  used,  lie  should  be  given  the  necessary  blank  forms. 

Buying  Price  List.  The  prices  at  which  merchandise  is  bought  in  this 
set  are  given  in  the  list  on  page  204. 

Cash  Paid,  July,  19- 


Date 

F. 

Net 
Cash 

Disc,  on 
I'uivh. 

i    Accts. 
p              General 
-i  >*y  • 

July 

1 

6 

Rent  Paid            For  July 

150 

150 

1 

3 

Office  Furn.         Office  safe 

250 

250 

1 

7 

Insurance             Premium 

1-20 

120 

3 

3 

J.  O.  Moran        Sight  draft  paid 

200 

200 

6 

4 

Bates  &  Co.         Inv.  7/6,  less  2% 

1176 

24 

I!    1200 

9 

4 

Allen  &  Go.         Inv.  7/6,  less  2% 

852 

60 

17 

40  1|     870 

| 

16 

s 

Sund.  Gen.  Exp.  Telegram 

] 

16 

8 

Office  Supplies    Stationery 

4 

50 

4 

50 

18 

8 

Notes  Pay.          Accept,  favor  King 

900 

itOO 

20 

6 

J.  K.  Levy           Sight  draft  paid 

1100 

1100 

21 

6 

Stoddard  &  Co.  Inv..  7/10,  less  2% 

1176 

24 

1200 

23 

8 

Notes  Pay.          Favor  E.  C.  Ellis 

500 

j| 

500 

23 

8 

Interest  Paid      On  above 

5 

5 

26 

7 

Salaries                For  the  mo. 

160 

I 

160 

27 

7 

Fr't&  Cart.  Out  For  the  mo. 

10 

1!        10 

6605 

10 

(55     40      4570            2Hi(t 

50 

© 

0 

RIGHT-HAND    PAGE    OF    CASH  BOOK,    SKT    V 


200 


PRINCIPLES  OF  BOOKKEEPING 


SELLING  PRICE  LISTS  FOR  JULY,  AUGUST,  AND  SEPTEMBER 


ARTICLE  AND  DESCRIPTION 

1 

2 

3 

4 

5 

No.  3116     Antique  Card  Table       .     .     . 
"    2546     Antique  Library  Rocker     .     . 
"    693       Antique  Wardrobe    .... 
Blue  Chenille  Curtain  . 

§19.75 
12.00 
25.75 
5.00 
15.00 
22.50 
2.25 
21.25 
15.75 
25.00 
20.00 
11.00 
110.00 
100.00 
5.50 
50.00 
10.00 
10.00 
23.25 
9.50 
25.00 
6.00 
40.00 
5.00 
21.25 
1G.50 
G5.00 
80.00 
195.00 
12.25 
10.00 
9.75 
14.25 
5.25 
37.00 
16.00 
17.00 
28.00 
18.75 
38.00 
92.00 
24.75 
3.25 
4.00 
5.00 

613.50 
29.25 
27.50 
5.00 
15.00 
24.00 
1.85 
21.99 
9.50 
24.50 
26.00 
19.00 
98.00 
152.25 
4.10 
39.75 
10.00 
9.00 
19.25 
9.00 
23.75 
6.00 
23.50 
9.00 
20.00 
17.25 
65.00 
75.00 
145.00 
12.00 
14.75 
9.75 
14.25 
12.00 
43.50 
10.00 
9.00 
21.00 
18.75 
15.50 
137.50 
22.00 
3.00 
3.00 
4.00 

§15.00 
11.75 
29.50 
5.00 
11.75 
21.50 
1.75 
22.00 
10.79 
39.00 
20.00 
9.50 
90.50 
175.00 
3.60 
33.75 
10.00 
17.25 
21.00 
7.50 
21.50 
6.00 
35.00 
10.00 
19.25 
19.00 
65.00 
112.50 
135.00 
10.00 
18.59 
9.75 
14.25 
10.00 
50.00 
9.50 
6.00 
21.50 
18.75 
19.75 
139.50 
25.00 
2.50 
3.00 
5.00 

§17.50 
22.00 
28.75 
5.00 
13.00 
23.00 
2.22 
20.50 
15.65 
19.90 
26.00 
9.65 
110.00 
125.00 
3.15 
39.75 
8.50 
22.50 
22.00 
9.50 
15.00 
6.00 
39.50 
6.00 
15.00 
13.50 
65.00 
60.00 
120.00 
15.00 
15.00 
9.75 
14.25 
9.50 
65.00 
7.50 
9.50 
17.50 
18.75 
20.00 
75.00 
15.00 
4.00 
2.75 
5.50 

§24.00 
13.50 
22.90 
5.00 
12.00 
21.G9 
2.69 
19.75 
18.50 
14.50 
26.00 
6.25 
95.00 
92.50 
3.15 
27.00 
9.75 
15.90 
17.75 
8.00 
39.00 
6.00 
88.50 
3.00 
12.50 
11.75 
65.00 
149.50 
117.50 
12.75 
11.50 
9.75 
14.25 
4.50 
35.00 
11.50 
13.00 
14.50 
18.75 
21.00 
65.00 
18.00 
5.00 
2.90 
6.50 

"    635       Brass  Bedstead     

"    15         Cane-seat  Dining  Chair      .     . 
"    59  A     Cheval  Glass   

"    7  LA     Child's  Crib    

"    10         China  Closet   

"    20         Corner  Chair  

"    245       Cedar  Chest     

"    16  A      Complete  Dining-room  Set 
"    572       Drawing-room  Suite      .     . 
«    170       English  Clothes  Pole     .     .     . 
«    5932     Empire  Toilet  Table      .     .     . 
"    3016     Fancy  Rocker 

"    36  B      Gentleman's  Chiffonier 
"    6387     Hall  Settle       

"    16  K      Leather-seat  Dining  Chair 
"    169  c    Library  Table       

"    91         Lace  Curtain  

"    16         Lady's  Dressing  Cabinet   . 
"    835       Music  Cabinet      

"    50         Mahogany  Parlor  Table 
«    626       Mahogany  Office  Chair       .     . 
"    396       Mahogany  Hall  Stand  .     .     . 
"    89         Mahogany  Chamber  Set     . 
"    1008     Oak  Sideboard      

«    2229     Oak  Dining  Tablo     .... 
«    73         Oak  Writing  Desk    .... 
"    68         Oak  Bookcase  . 

"    76  A      Oak  Chamber  Set     .... 
"    687       Ornamental  Table    .... 
"    20  D      Parlor  Cabinet     

"    821       Parlor  Lamp    

"     176  c    Piano  Chair     

"    57         Reclining  Couch  

"    17  A     Roman  Chair  

"    73         Sofa  Bed     

"    5926     Secretary  Book  Cabinet      .     . 
"    65         Turkish  Rocker    

"    27  c      Woven-wire  Mattress     .     .     . 
"    16         Wool  Mattress      ... 

"    495       White  Iron  Bedstead     .     .     . 

SET  V.    JOBBING  FUHXITL'IIE  BUSINESS 


201 


SELLING  PRICE  LISTS  FOR  JULY,  AUGUST,  AND  SEPTEMBER 


6 

7 

8 

9 

10 

11 

12 

13 

$19.00 

$1G.50 

$20.50 

$23.20 

§24.00 

§15.00 

818.50 

S19.50 

12.25 

17.00 

22.00 

13.25 

12.00 

19.25 

20.00 

27.25 

24.50 

2G.75 

28.00 

29.00 

27.50 

29.50 

24.00 

30.00 

5.00 

5.00 

5.00 

5.00 

5.00 

5.00 

5.00 

5.00 

13.50 

12.25 

14.00 

14.50 

17.00 

11.00 

12.75 

14.75 

22.00 

23.50 

22.50 

20.00 

21.50 

21.75 

22.25 

23.25 

2.10 

2.45 

1.90 

2.45 

2.50 

l.SO 

2.20 

2.00 

21.00 

21.25 

22.00 

22.50 

10.00 

20.50 

21.50 

19.50 

15.00 

12.70 

14.50 

13.75 

10,10 

12.70 

18.00 

18.50 

24.00 

20.50 

17.75 

19.50 

14.00 

12.80 

32.50 

24.50 

26.00 

20.00 

20.00 

20.00 

20.00 

20.00 

20.00 

20.00 

11.50 

9.75 

10.00 

9.50 

7.75 

10.00 

15.50 

12.50 

105.00 

97.50 

112.50 

95.00 

100.00 

90.00  ' 

94.50 

110.00 

97.50 

100.00 

115.00 

102.50 

92.50 

120.00 

135.00 

137.50 

4.00 

5.20 

3.65 

3.00 

4.25 

5.00 

'    5.25 

3.50 

32.50 

50.00 

40.00 

42.50 

35.00 

27.50 

27.00 

36.50 

8.00 

10.00 

8.50 

9.00 

9.50 

S.25 

9.25 

10.25 

15.00 

12.50 

13.50 

17.50 

10.00 

11.50 

12.50 

22.00 

17.50 

23.25 

21.00 

17.75 

22.50 

19.75 

18.50 

17.00 

9.00 

7.20 

8.50 

7.50 

8.40 

9.50 

8.00 

7.00 

23.50 

25.00 

27.50 

29.00 

31.00 

32.50 

22.50 

19.00 

6.00 

6.00 

6.00 

6.00 

6.00 

0.00 

G.OO 

G.OO 

35.00 

25.00 

27.00 

33.50 

38.00  . 

25.00 

34.00 

39.20 

5.50 

6.00 

5.00 

7.00 

6.50 

9.00 

10.00 

8.75 

20.00 

21.25 

19.50 

13.00 

15.50 

17.50 

19.25 

15.00 

15.00 

12.00 

16.40 

14.50 

18.50 

17.00 

15.00 

11.50 

65.00 

65.00 

65.00 

65.00 

65.00 

65.00 

05.00 

65.00 

95.00 

140.00 

87.50 

90.00 

100.00 

75.00 

110.00 

105.50 

150.00 

125.00 

145.00  • 

120.00 

135.00 

137.50 

120.00 

1GO.OO 

12.00 

16.00 

10.50 

13.25 

11.00 

13.20 

11.00 

13.20 

13.00 

17.50 

11.00 

14.00 

10.50 

12.40 

18.00 

17.00 

9.75 

9.75 

9.75 

9.75 

9.75 

9.75 

9.75 

9.75 

14.25 

14.25 

14.25 

14.25 

14.25 

14.25 

14.25 

14.25 

6.50 

7.00 

5.00 

4.50 

8.00 

7.50 

9.00 

10.00 

40.00 

37.50 

50.00 

52.50 

60.00 

02.00 

05.00 

03.50 

8.00 

7.50 

12.50 

15.00 

13.50 

12.00 

10.50 

14.00 

10.00 

12.00 

14.50 

9.50 

8.50 

13.00 

11.00 

9.50 

20.00 

27.00 

18.00 

14.50 

16.20 

15.90 

21.50 

25.00 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

22.00 

35.00 

21.20 

24.60 

30.50 

22.70 

10.25 

28.00 

100.00 

96.00 

125.00 

132.50 

91.50 

124.00 

110.00 

112.50 

21.00 

16.25 

14.75 

24.20 

18.75 

19.40 

22.50 

23.00 

3.50 

4.00 

3.75 

4.50 

5.00 

5.50 

2.50 

3.25 

3.00 

4.00 

2.90 

3.25 

2.70 

3.20 

4.00 

3.00 

5.00 

4.00 

6.00 

4.50 

5.25 

6.25 

4.25 

G.20 

202 


PRINCIPLES  OF  BOOKKEEPING 


SELLING  PRICE  LISTS  FOR  JULY,  AUGUST,  AND  SEPTEMBER 


ARTICLE  AND  DESCRIPTION 

14 

15 

16 

17 

No.  3116 

Antique  Card  Tabh^  

$21.60 

$13.50 

$16.50 

$2000 

«    2546 
«    693 

Antique  Library  Rocker     .... 
Antique  Wardrobe    

14.50 
25.00 

18.00 
26.00 

26.00 
25.00 

17.50 
2750 

Blue  Chenille  Curtain   

5.00 

5.00 

5.00 

500 

"    16s 

Brass  Easel       

12.50 

16.00 

13.00 

1500 

"     635 

Brass  Bedstead      

21.00 

20.50 

24.00 

21.50 

«    15 
"    59  A 

Cane-seat  Dining  Chair      .... 
Cheval  Glass    

1.75 

23  00 

1.95 

23  50 

2.00 
21  50 

2.90 
24  25 

"      71  A 

Child's  Crib      

16  75 

16  40 

15  75 

1725 

«    10 

China  Closet     

27  50 

30  00 

25  00 

33  60 

'    20 

Corner  Chair    

26  00 

26  00 

26  00 

26  00 

<    245 

Cedar  Chest      

14  25 

10  75 

11  20 

1500 

<      16  A 

<    572 

Complete  Dining-room  Set 
Drawing-room  Suite  

88.50 
96.50 

94.25 
99  50 

106.00 
15225 

91.50 
125  00 

'    170 

English  Clothes  Pole     

3.60 

420 

4  30 

540 

<     5932 

Empire  Toilet  Table      .     . 

34  00 

°S  50 

40  00 

37  50 

'    3016 

Fancy  Rocker  

10.00 

9  75 

800 

9  50 

"    36  B 

Gentleman's  Chiffonier  

20.00 

21  50 

16  40 

21  20 

'    6387 

Hall  Settle  

17  50 

20  00 

17  50 

19  00 

«    16  K 

<    169  c 
'    91 

Leather-seat  Dining  Chair      .     .     . 
Library  Table  
Lace  Curtain    

8.75 
25.00 
6  00 

9.50 
35.00 
6  00 

9.50 
25.50 
6  00 

7.70 
23.00 
6  00 

<    16 
<    835 

Lady's  Dressing  Cabinet    .... 
Music  Cabinet  

32.00 
4  50 

30.00 

7  00 

34.00 
5  50 

31.50 
7  00 

'    50 
<    626 

Mahogany  Parlor  Table     .... 
Mahogany  Office  Chair  

21.00 
12.00 

18.00 
15  50 

20.00 
12  50 

17.50 
14  50 

<    396 

Mahogany  Hall  Stand   . 

65  00 

65  00 

65  00 

65  00 

'    89 
<     1008 

Mahogany  Chamber  Set     .... 
Oak  Sideboard      

112.50 
150  00 

125.00 
13000 

85.00 
195  00 

142.00 
147  50 

'    2229 

Oak  Dining  Table     .... 

14  00 

19  50 

12  50 

14  90 

'    73 

Oak  Writing  Desk     

15  50 

16  50 

13  75 

17  50 

'    68 

Oak  Bookcase  . 

9  75 

9  75 

9  75 

Q  75 

'    76  A 

Oak  Chamber  Set      

1425 

14  25 

14  25 

1425 

<    687 

Ornamental  Table     

9  50 

8  50 

1000 

750 

'    20  D 

Parlor  Cabinet      

45  00 

47  50 

50  OQ 

43  50 

'    821 

Parlor  Lamp     

16  00 

10  00 

8  25 

10  50 

<    176  c 

Piano  Chair      

700 

10  00 

9  50 

13  00 

<    57 

Reclining  Couch  

2750 

°0  50 

21  40 

27  90 

<      17  A 

Roman  Chair  

18  75 

18  75 

18  75 

18  75 

«    73 

Sofa  Bed      

16  00 

19  75 

22  50 

31  50 

'    5926 
'    65 

Secretary  Book  Cabinet      .... 
Turkish  Rocker    

75.00 
2000 

65.00 
23  75 

80.00 
29QO 

90.00 
16  60 

«    27  c 

Woven-wire  Mattress 

4  20 

2  50 

9  75 

3  45 

'    16 

Wool  Mattress      .... 

290 

3  00 

2  90 

4  00 

'    495 

White  Iron  Bedstead     .     . 

5  50 

4  70 

4  90 

4  40 

SET  V.    JOBBING  FURNITURE  BUSINESS 


203 


SELLING  PRICE  LISTS  FOR  JULY,  AUGUST,  AND  SEPTEMBER 


18 

19 

20 

21 

22 

23 

24 

25 

$15.20 

$22.00 

$21.50 

$24.00 

$23.50 

$18.00 

$19.50 

$22.50 

22.00 

16.00 

24.00 

19.00 

28.20 

21.00 

20.40 

30.00 

26.00 

24.00 

29.00 

28.00 

22.50 

27.50 

22.90 

25.00 

5.00 

5.00 

5.00 

5.00 

5.00 

5.00 

5.00 

5.00 

15.40 

11.50 

14.20 

10.25 

13.25 

12.00 

13.40 

14.50 

20.00 

23.00 

21.00 

21.40 

23.50 

21.75 

22.25 

20.50 

1.80 

2.30 

1.90 

2.40 

2.30 

1.70 

1.95 

2.25 

23.00 

20.00 

19.00 

19.50 

23.50 

19.75 

22.00 

22.50 

15.40 

10.70 

12.40 

13.75 

10.20 

9.90 

11.75 

12.90 

37.50 

17.50 

18.50 

20.70 

24.90 

23.20 

15.00 

17.20 

26.00 

26.00 

20.00 

20.00 

20.00 

20.00 

20.00 

20.00 

7.50 

6.75 

8.90 

11.20 

18.00 

12.00 

13.75 

14.50 

96.40 

100.00 

89.50 

92.00 

98.00 

97.50 

109.20 

107.00 

100.00 

160.00 

142.50 

94.50 

102.50 

99.50 

110.00 

120.00 

3.90 

3.75 

4.60 

4.40 

5.50 

4.20 

3.10 

3.35 

27.50 

35.00 

29.50 

3.3.50 

28.00 

35.50 

45.00 

50.00 

10.00 

9.75 

8.50 

9.25 

10.50 

8.25 

10.25 

9.00 

22.00 

23.00 

15.40 

13.90 

12.50 

9.90 

10.50 

11.80 

21.00 

22.50 

23.25 

20.00 

19.75 

17.75 

20.50 

23.00 

6.45 

9.20 

8.80 

7.00 

9.30 

9.50 

8.50 

9.00 

27.00 

22.50 

30.00 

31.50 

28.00 

21.00 

17.50 

35.00 

6.00 

6.00 

6.00 

6.00 

0.00 

6.00 

0.00 

6.00 

24.50 

23.90 

2G.20 

32.00 

39.00 

37.50 

39.00 

40.00 

9.50 

8.00 

5.00 

10.00 

8.50 

0.50 

4.50 

7.50 

16.00 

19.25 

15.50 

18.50 

21.25 

17.00 

10.25 

20.50 

16.00 

17.20 

11.70 

19.20 

18.00 

17.50 

13.30 

14.75 

65.00 

65.00 

65.00 

05.00 

05.00 

05.00 

05.00 

05.00 

130.00 

117.50 

94.40 

97.50 

124.00 

101.75 

109.00 

114.20 

122.50 

165.00 

175.00 

127.50 

162.50 

IbO.OO 

187.50 

190.00 

16.20 

12.75 

10.80 

11.40 

13.65 

14.75 

11.50 

10.50 

14.65 

11.50 

10.80 

13.75 

15.60 

18.50 

17.90 

15.00 

9.75 

9.75 

9.75 

9.75 

9.75 

9.75 

9.75 

9.75 

14.25 

14.25 

14.25 

14.25 

11.25 

14.25 

14.25 

14.25 

9.50 

8.25 

7.75 

9.20 

11.00 

10.50 

7.20 

6.50 

32.50 

28.20 

31.50 

43.50 

52.00 

57.50 

00.00 

35.50 

9.75 

12.25 

11.50 

13.20 

8.75 

7.50 

11.20 

14.25 

14.20 

15.00 

12.50 

9.00 

7.80 

10.50 

15.25 

10.00 

24.20 

21.00 

25.20 

14.90 

13.80 

17.00 

20.50 

20.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

23.90 

17.70 

16.90 

26.25 

27.50 

19.40 

20.00 

22.50 

88.40 

97.50 

101.00 

74.20 

81.80 

135.00 

127.50 

92.20 

15.50 

24.80 

16.75 

23.90 

22.60 

23.20 

18.80 

17.90 

4.15 

3.65 

4.40 

5.25 

4.80 

3.90 

3.35 

4.15 

3.80 

2.95 

3.90 

3.25 

3.15 

3.65 

3.00 

4.00 

6.60 

4.25 

5.35 

6.40 

6.60 

5.25 

5.10 

•J.75 

204 


PRINCIPLES  OF  BOOKKEEPING 


BUYING  PRICES  FOR  JULY,  AUGUST,  AND  SEPTEMBER 


ARTICLE  AND  DESCRIPTIOX 

No 

3116 

Antique  Card  Table  

$14  50 

u 

2546 

Antique  Library  Rocker     

9.00 

il 

693 

Antique  AVardrobe    .... 

91  75 

u 

16  B 

Blue  Chenille  Curtain  
Brass  Easel      . 

4.00 
1°  50 

a 

635 

Brass  Bedstead     

15  75 

tt 

15 

Cane-seat  Dining  Chair      

1  50 

U 

59  A 

Cheval  Glass    .... 

15  °5 

u 

71  A 

Child's  Crib      ... 

11  50 

it 

10 

China  Closet    ... 

17  25 

u 

20 

Corner  Chair   ....                     .     . 

90  oo 

ff 

245 

Cedar  Chest     

8  50 

(f 

16  A 

Complete  Dining-room  Set     

7800 

(i 

572 

Drawing-room  Suite  ....          .     . 

75  00 

(l 

170 

English  Clothes  Pole     

3  50 

u 

I 

5932 
3016 

Empire  Toilet  Table     
Fancy  Rocker  

39.00 
7  50 

I 

36  B 

Gentleman's  Chiffonier      

750 

I 

6387 

Hall  Settle  

16  50 

I 

16  K 

Leather-seat  Dining  Chair      .... 

6  50 

( 

169  c 

Library  Table  

°0  00 

( 

91 

Lace  Curtain   

4  50 

It 

16 

Lady's  Dressing  Cabinet    

30  00 

I 

835 

Music  Cabinet      

4  00 

, 

50 

Mahogany  Parlor  Table     

15  25 

( 

626 

Mahogany  Office  Chair      

1250 

I 

396 

Mahogany  Hall  Stand  

43  00 

I 

89 

Mahogany  Chamber  Set    

60  00 

I 

1008 

Oak  Sideboard      

150  00 

< 

2229 

Oak  Dining  Table     

9  75 

« 

73 

Oak  Writing  Desk    

750 

< 

68 

Oak  Bookcase  

750 

( 

76  A 

Oak  Chamber  Set      

1100 

I 

687 

Ornamental  Table     

4  00 

( 

20  D 

Parlor  Cabinet      

25  00 

( 

821 

Parlor  Lamp    

13  00 

( 

170  c 

Piano  Chair     

12  50 

( 

57 

Reclining  Couch  

21  00 

t 

17  A 

Roman  Chair  

15  00 

( 

73 

Sofa  Bed      

30  00 

( 

5926 

Secretary  Book  Cabinet     .     . 

6500 

« 

65 

Turkish  Rocker    

18  00 

u 

27  c 

Woven-wire  Mattress     .     .     . 

175 

u 

16 

Wool  Mattress      .     .     . 

225 

u 

495 

White  Iron  Bedstead     .     . 

3  75 

SET  V.    JOBBING    FURX1TUKU  BUSINESS  205 

WORK    FOR   JULY 

Incoming  Business  Forms  for  July.  A  tablet,  separate  from  the  text, 
containing  all  the  incoming  business  forms,  is  available  for  writing  this 
set  when  business  practice  is  used.  A  list  of  the  forms  is  given,  so  that 
the  text  affords  all  material  for  writing  the  set  it'  business  practice  is 
omitted.  These  forms  also  afford  an  opportunity  for  the  study  of  the 
set  as  a  whole  before  writing  it,  thus  meeting  a  requisite  for  adequate 
drill  work,  whether  business  forms  are  used  or  not.  The  text  is  complete 
in  itself. 

The  list  of  incoming  business  forms  for  July  is  given  on  pages 
205-207.  If  the  set  is  written  without  using  the  tablet  of  printed 
incoming  forms,  it  will  be  necessary  for  the  student  to  prepare  them 
before  he  begins  to- write. the  set. 

After  these  forms  are  written  they  should  be  placed  in  the  envelope 
marked  Incoming  Business  Forms,  and  withdrawn  as  they  are  needed 
when  writing  the  set. 

Whatever  plan  the  instructor  may  adopt,  either  using  business  prac- 
tice or  writing  the  set  as  a  study  of  the  theory  of  bookkeeping  only, 
this  material  is  immediately  at  hand  for  reference,  for  class  drills  and 
discussion,  for  reviews  during  the  progress  of  the  set  or  when  the  set 
is  finished. 

This  plan  of  the  text  does  away  with  the  necessity  of  using-  a  pad  of  vouchers 
which  are  wholly  independent  of  the  text. 

In  all  the  following  invoices  the  student,  as  proprietor,  is  represented 
as  the  purchaser. 

Form  1.  Note  of  J  B.  Maxwell,  dated  City,  June  30,  drawn  in  your  favor, 
payable  at  The  Union  Bank  20  da.  after  date-,  with  interest 
at  6%,  $500. 

Form  2.  J.  B.  Topham's  draft,  in  his  own  favor,  on  AV.  D.  Ivimbaeh,  City, 
transferred  to  you  by  full  indorsement.  Draft  is  for  $450  and 
is  dated  City,  June  9,  payable  at  The  Union  Bank,  P>0  da. 
after  date. 

Form  3.  Bill  of  Thorp,  Martin  &  Thorp,  dated  798  Franklin  St.,  City, 
July  1.  Terms:  cash,  less  2%.  Items  as  follows  : 

4  M  Letterheads  at  $2  1  Ledger,  $(> 

2  M  Envelopes  at  $1.50  1  Journal,  $o 

1  M  Billheads,  $2  1  Cashbook,  $:).r><) 

2  gro.  Steel  Pens  at  75  £  1  Sales  Book,  $:S 

1  qt.  Writing  Fluid,  75  £  1  Notebook,  $1.50 

1  doz.  Pencils,  300  1  Purchase  Book,  $1 

Deduct  the  discount  on  the  bill  and  receipt  it. 


206 


PRINCIPLES  OF  BOOKKEEPING 


Form  4.  Invoice  of  Cobb,  Bates  &  Co.,  dated  62  Portland  St.,  City,  July  6. 
Terms  :  3/10,  net  30  da.  Items  as  follows  : 

9  #5932  Empire  Toilet  Tables          10  #76  A  Oak  Chamber  Sets 
12  #36  B  Gentleman's  Chiffoniers         5  #1008  Oak  Sideboards 
5  #16  Lady's  Dressing  Cabinets          6  #693  Antique  Wardrobes 

Form  5.  Invoice  of  Derby  Mfg.  Co.,  dated  17  Portland  St.,  City,  July  9. 
Terms  :  draft  at  10  da.  for  the  amount  of  the  bill,  less  2%. 
Items  as  follows  : 

4  #20  D  Parlor  Cabinets  10  #3110  Antique  Card  Tables 

4  #169  c  Library  Tables  ">  #89  Mahogany  Chamber  Sets 

10  #16  A  Complete  Dining-room  Sets 

Do  not  deduct  the  discount  on  the  bill ;  a  draft  will  be  attached  when  it 
comes  into  your  possession. 

Form    6.    Draft  of  Derby  Mfg.  Co.,  dated  City,  July  9,  payable  at  10  days 

sight,  on  you,  in  favor  of  themselves,  for  the  net  amount  of  the 

above  bill. 
Form    7.    J.  0.  Moran's  sight  draft,  dated  City,  July  10,  on  you,  in  his  own 

favor>  $200. 
Form    8.    Check  of  J.  E.  Bender,  dated  Troy.  July  13,  on  Traders  National 

Bank,  in  your  favor,  $1169.09. 
Form    9.    Invoice  of  W.   H.   Stearns  &  Co.,  dated  Chicago,  111.,  July  9. 

Terms :  30-day  draft  for  one  half  of  the  bill ;  balance  in  45  da. 

Items  as  follows : 

20  #626  M.  Office  Chairs 
20  #3016  Fancy  Rockers. 
5  #  2546  Ant.  Lib.  Rockers 


100  #  15  C.  Dining  Chairs 
100  #  16  K  L.  Dining  Chairs 
10  #2229  O.  Dining  Tables 


Form  10.    W.  H.  Stearns  &  Co.'s  draft,  dated  Chicago,  111.,  July  9,  payable 

30  da.  after  date,  on  you,  in  favor  of  themselves,  for  one  half 

the  amount  of  the  above  invoice. 
Form  11.    Your  draft  at  30  da.  from  July  10  on  Samuel  W.  Bradley,  Bedford, 

in  favor  of  yourself,  accepted,  for  $840.25. 
Form  12.    Note  of  J.  E.  Farley,  dated  City,  July  12,  at  30  da.,  in  favor  of 

Samuel  W.  Bradley,  Bedford,  for  |179.    Transferred  to  you  by 

full  indorsement. 
Form  13.    A  bank  draft  drawn  by  Traders  National  Bank,  Springfield,  on 

Chemical  National  Bank,  New  York,  July  16;  drawn  payable 

to  G.  H.  Ingalls  &  Co.,  A.  B.  Turner,  Cashier,  for  $1085.19. 

Transferred  to  you  by  full  indorsement. 
Form  14.    Invoice  of  C.  W.  Allen  &  Co.,  dated  46  Merrimac  St.,  Trenton, 

N.J.,  July  9.    Terms:    2/30,  net  60  da.    Items  as  follows: 

24  #27  c  Woven-wire  Mattresses        10  #71  A  Child's  Cribs 
24  #16  Wool  Mattresses  24  #495  White  Iron  Bedsteads 

50  #  635  Brass  Bedsteads 


SET  V.    JOBBING  Fl'RNITl'IlE  BUSINESS 


207 


Form  15.  Invoice  of  William  Leavens  &  Co.,  dated  32  Canal  St.,  New  York 
City,  July  11.  Terms  :  sight  draft  in  15  da.  for  the  amount  of 
the  bill,  less  2r/0  Items  as  follows  : 

12  #73  Oak  Writing.  Desks  :}  #5<l-JO  Sec.  Honk  Cabinets 

15  #68  Oak  Bookcases  0  #:5<.x;  Mahogany  Hall  Stands 

Do  not  deduct  the  discount  on  the  bill. 

Form  16.  E.  F.  Green  &  Co.'s  draft,  dated 'Bangor,  July  U,  on  H.  B.  Claflin 
&  Co.,  City,  in  your  favor,  at  GO  da.  from  date,  for  $400. 

Form  17.  Invoice  of  Randall  Mfg.  Co.,  dated  12(5  East  123d  St.,  New  York 
City,  July  15.  Terms  :  3/10,  1/30,  net  (50  da.  Items  as  follows  : 

10  #57  Reclining  Couches  50  #05  Turkish  Rockers 

5  #73  Sofa  Beds 

Form  18.  Invoice  of  S.  T.  Udell  &  Co.,  dated  Chicago.  111.,  July  19.  Terms  : 
sight  draft  in  45  da.  Items  as  follows  : 

•   19  #50  M.  Parlor  Tables  11  #10  China  Closets 

Form  19.  William  Leavens  &  Co.'s  sight  draft,  dated  New  York  City, 
July  24,  on  you,  in  favor  of  themselves,  for  the  net  amount  of 
Form  15. 

Form  20.  C.O.I),  envelope.  Get  $50  of  the  instructor  and  place  it  in  the 
envelope.  Data  as  follows :  Cash  inclosed,  $50.  Goods  were 
shipped  by  you  to  Chas.  B.  Lyman,  Springfield,  July  24. 

NOTE.  An  envelope  containing  the  required  amount  of  cash  will  he 
found  in  the  back  part  of  the  tablet  of  incoming  business  forms.  If 
business  practice  is  used  and  the  incoming  business  forms  are  not 
used,  get  the  cash  of  the  instructor. 

Form  21.    Check  of  David  E.  Teeter,  dated  City,  July  29,  on  Traders  National 

Bank,  in  your  favor,  for  $1291.95. 
Form  22.    Bill  of  the  Metropolitan  Carting  Co.,  dated  City,  July  31.    Items 

as  follows  : 

July    3,  Cartage,  $8.50 

10,  Cartage,  $7.50;  Freight,  $1)8.10 
13,  Cartage,  $6  ;   Freight,  $45.00 
26,  Cartage,  $3.25 

Receipt  the  bill  as  follows  :  Metropolitan  Carting  Co. 

Form  23.  Receipted  bill  of  the  Consolidated  Gas  and  Electric  Light  Co.. 
dated  City,  July  31.  Terms:  cash,  less  5</;.  Items  as  follows: 

Meter  at  current  date,  8200  cu.  ft. 

Meter  at  last  settlement,  2000  cu.  ft. 

Gas  consumed,  6200  cu.  ft.  at  $1.20  per  1000 

Deduct  the  discount  before  receipting  the  bill.  In  receipting,  sign  the 
name  of  the  gas  company,  per  your  initials. 


208  PRINCIPLES  OF  BOOKKEEPING 

Opening  the  Set.  The  following  transactions  are  for  the  work  during 
the  month  of  July: 

MEMORANDA  OF  TRANSACTIONS  FOR  JULY 

July  1 

You  begin  a  Jobbing  Furniture  business  at  209  Causeway  St.,  with 
the  following  assets  and  liabilities: 

ASSETS 

J.  B.  Maxwell's  note,  dated  June  30,  in  your  favor,  payable  at  The  Union 
Bank  20  da.  after  date,  with  interest  at  6%,  $500. 

Accepted  draft,  dated  June  9,  payable  at  The  Union  Bank  30  da.  after 
date,  $450.  This  draft  is  drawn  by  J.  B.  Topham,  in  his  own  favor,  on 
W.  D.  llimbach,  and  transferred  to  you  by  full  indorsement. 

The  stock  and  furniture  of  the  late  Allen  &  Bailey  Furniture  Co.,  as  per 
schedule  on  file,  $  7150. 

Cash  on  hand,  $6200. 

A  lot  located  at  269  Causeway  St.,  as  per  warranty  deed  on  file,  valued 
at  $2000. 

Building  and  store  fixtures  valued  at  $5000. 

Office  furniture,  per  schedule  on  file,  $450. 

Delivery  equipment  (horses,  wagons,  and  harness),  $450. 

The  following  persons  owe  you  on  account :  J.  E.  Bender,  Troy,  $1350 ; 
Samuel  W.  Bradley,  Bedford,  $750 ;  E.  F.  Green  &  Co.,  Bangor,  $400. 

LIABILITIES 

Your  note  at  1  mo.  from  June  25,  in  favor  of  Allen  &  Bailey  Furniture  Co., 
payable  at  The  Union  Bank,  for  $2500,  with  interest  at  6%. 

C.  O.  Boswell's  draft  at  30  days  sight,  dated  New  York  City,  June  20,  on 
you,  in  his  own  favor,  for  $1000.  You  accepted  it  June  25,  payable  at  The 
Union  Bank. 

You  owe  the  following  persons  on  account:  J.  0.  Moran,  City,  $2100; 
Paine  Manufacturing  Co.,  Bedford,  $350 ;  Stoddard  &  Co.,  City,  $4750. 

NOTE.  The  ledger  title  for  the  lot  is  Real  Estate;  for  the  building  and  the  store 
fixtures,  Building  and  Fixtures ;  for  the  schedule  of  office  furniture,  Office  Furniture ; 
for  the  horses,  wagons,  and  harness,  Delivery  Equipment. 

Make  the  opening  journal  entry. 
Remember  to  record  the  cash  item  in  the  cashbook. 
Record  the  notes  and  acceptances  in  the  notebook. 
Refer  to  the  model  notebook  on  pages  196  and  197. 

Write  the  note  and  the  draft  given  in  the  liabilities,  and  hand  them  in. 
Did  you  remember  to  check  the  cash  item  in  the  opening  journal  entry,  in  both 
the  cashbook  and  the  journal  ?    How  are  they  checked  ? 


SET  V.    JOBBING  FUUNITUUE  BUSINESS  209 

July  ,1 

Take  J.  B.  Maxwell's  note,  Form  1,  and  W.  I).  Rimbach's  acceptance, 
Form  2,  and  place  them  in  the  Unpaid  Bills  envelope.  The  warranty 
deed,  the  schedule  of  property  on  hand,  etc.,  are  assumed  to  be  on  file, 
and  you  will  make  no  reference  to  them  at  this  time. 

Apply  to  the  instructor  for  the  cash  investment. 

Deposit  in  The  Union  Bank  all  the  cash  on  hand  except  $100. 

The  bank  account  will  he  kept  in  the  sumo  manner  us  in  the  introductory  work. 
An  envelope  and  sheet  for  filing  the  checks  drawn,  and  for  making  the  monthly 
bank  statement,  will  be  found  in  the  package  of  business  forms.  The  left  stub 
of  the  check  book  may  be  used  for  recording  any  important  memoranda. 

Pay  by  check  the  bill  of  Thorp,  Martin  &  Thorp,  for  books,  sta- 
tionery, etc.,  Form  3. 

Place  the  bill  in  the  Paid  Billy  envelope.    Debit  Office  Siiii/dies. 

Secure  from  the  Manhattan  Fire  Insurance  Co.  a  policy  of  insurance 
for  $12,000  on  the  store,  the  goods,  and  the  fixtures  at  \\%  premium. 

Pay  the  premium  by  check  in  favor  of  Chas.  M.  Shaw,  general  agent  for  your 
place.  Debit  Insurance. 

The  policy,  it  is  assumed,  was  received  and  filed  yesterday. 

NOTE. 'A  policy  of  insurance  is  simply  an'insurance  company's  contract  with  the 
insured.  Such  a  contract  covers  usually  the  following  : 

Premium  paid  by  the  insured  Amount  of  insurance 

Term  of  insurance  Description  of  the  property  insured 

Extent  of  the  company's  liability,  etc. 

This  agreement  is  signed  usually  by  the  president  and  the  secretary  of  the 
company  as  well  as  by  the  local  agent  of  whom  you  obtained  it. 

Engage  Harry  K.  Sutton  at  |GO  and  Harvey  L.  Grant  at  £•">()  per 
month  as  salesmen;  Michael  Donovan  at  $30  per  month  as  delivery 
man;  Daniel  L.  Coon  and  Geo.  W.  Ainsley  at  $48  and  $40  per  month, 
respectively,  as  upholsterers  and  finishers. 

A  memorandum  of  the  above  may  be  made  by  the  student  and  filed  with  the 
incoming  papers. 

Letters  Ordering  Goods.  In  writing  letters  ordering  goods,  observe 
the  following: 

1.  Arrange  the  items  one  on  a  line. 

2.  Give  shipping  directions  in  out-of-town  orders. 

3.  In  case  of  a  first  order: 

a.  Give  satisfactory  references. 

b.  State  how  you  intend  to  pay. 


210  PRINCIPLES  OF  BOOKKEEPING 

4.  When   you    name    prices,    state    at    what    point   you    expect   the 
goods  f.  o.  b.    This  is  a  matter  of  importance,  as  it  affects  the  cost  of 
the  goods. 

5.  Always  be  definite  with  regard  to  the  quality  and  the  quantity 
of  the  articles  ordered. 

6.  If  it  is  a  special  order,  state  the  purpose  for  which  the  goods  are 
intended. 

7.  State,    if    necessary,    the    exact    date    on    which    the    goods    must 
reach  you, 

8.  Study  the  following  model  letter: 

Hartford,  Conn.,  July  1,  19— 
Mr.  Harold  M.  Bates 
136  Main  St. 

Grand  Rapids ,  Michigan 
Dear  Sir  : 

Please  ship  the  following  goods  by  freight,  subject 
to  your  beet  cash  discount  : 

10  #5926  Secretary  Book  Cabinets 
15  #396  Mahogany  Hall  Stands 
20  #73  Oak  Writing  Desks 
10  #57  Reclining  Couches 
50  #65  Turkish  Rockers 
25  #68  Oak  Bookcases 
5  #73  Sofa  Beds 

I  am  permitted  to  refer  you  to  the  First  National 
Bank,  of  this  city,  as  to  my  business  standing. 

Yours  truly, 


MODEL    LETTER    ORDERING    GOOI>6 


July  3 

Write  letters,  ordering  the  following  goods: 

1.  Of  Cobb,  Bates  &  Co.,  62  Portland  St.,  City,  the  goods  outlined 
in  Form  4. 

.     Give  references  and  ask  for  their  best  cash  discount. 

NOTE.  In  this  set  no  entry  will  be  made  at  the  time  of  ordering  goods.  Almost 
all  of  the  orders  are  sent  to  out-of-town  firms,  and  sufficient  time  is  allowed  to  elapse 
for  the  student  to  receive  the  invoice  and  the  goods  before  making  any  entry. 


SET  V.    JOBBING  FURNITURE  BUSINESS  211 

2.  Of  William  Leavens  &  Co.,  o2  Canal  St.,   Xe\v   York  City,  the 
goods  outlined  in  Form  lo. 

Offer  to  honor  their  sight  draft  in  l.~t  da.  for  tin-  amount  of  the  hill  less  the 
regular  discount  for  payments  within  15  da. 

As  you  are  a  stranger  to  this  firm,  give  New  York  City  references  instead  of 
local  references. 

3.  Of  C.  W.  Allen  &  Co.,  40  Merrimac  St.,  Trenton,  X.J.,  the  goods 
outlined  in  Form  14. 

You  have  had  dealings  with  this  firm  before  and  expect  them  to  name  their 
regular  terms. 

4.  Of  Derby  Manufacturing  Co.,   17   Portland  St.,  City,  the  goods 
outlined  in  Form  5. 

Ask  them  to  allow  you  their  usual  discount,  and  to  draw  on  you  for  the  amount 
of  the  bill  at  10  da.  from  date. 

5.  Of   W.  H.  Stearns   &   Co.,   Chicago,   111.,   the  goods   outlined   in 
Form  9. 

Tell  them  that  you  will  honor  their  30-day  draft  for  one  half  the  bill,  and  will 
pay  the  balance  in  45  da. 

July  5 

Cancel  your  indebtedness  to  Paine  Manufacturing  Co.,  Bedford,  by 
a  sight  draft  on  Samuel  W.  Bradley  of  the  same  place. 

Write  a  letter  of  remittance  and  send  it  with  the  above  draft  to  Paine  Manu- 
facturing Co.  Also  write  a  letter  to  Samuel  W.  Bradley,  notifying  him  of  the  draft 
you  have  drawn  on  him  at  sight.  Make  the  journal  entry.  The  amount  may  be 
found  on  page  208  under  the  liabilities. 


Model  Letters.    The  following  models  suggest  what  the  above  letters 
should  contain : 

Boston,  Mass.,  July  5,  19— 
0.  M.  Behrns  &  Go. 
Syracuse,  N.Y. 
Gentlemen  : 

Inclosed  find  a  sight  draft  on  K.  P.  Shedd,  of  your 
city,  drawn  in  your  favor,  for  Three  Hundred  Fifty  (350) 
Dollars,  in  full  settlement  of  account  to  date. 

Very  truly  yours , 

E.  R.  Gaylord  &  Co. 

per  7W. 


212  PRINCIPLES  OF  BOOKKEEPING 

Boston,  Mass.,  July  5,   19 — 
Mr.  K.   P.   Shedd 
Syracuse,  N.Y. 

Dear  Sir : 

We  have  this  day  drawn  upon  you  at  sight,  in  favor 
of  0.  M.  Behrns  &  Co.,  of  your  city,  for  Three  Hundred 
Fifty  (350)  Dollars. 

Very  truly  yours , 

E.  R.  Gaylord  &  Co. 

per  7W. 


July  6 

David  E.  Teeter,  360  Main  St.,  City,  orders  the  following  goods. 
The  order  is  filled  at  the  prices  given  herewith: 

10  #5932  E.  Toilet  Tables  at  $50  3  #89  M.  Chamber  Sets  at  $80 

1  #16  A  C.  Dining-room  Set,  $110          2  #1008  O.  Sideboards  at  $195 

1  #396  Mahogany  Hall  Stand,  $65 

Terms :  3/5,  1/30,  net  60  da. 

NOTE.  The  space  allowed  for  recording  the  terms  of  sale  on  a  bill  is  generally 
limited,  and  bookkeepers  find  it  necessary  to  use  symbols  and  abbreviations  to 
indicate  them.  The  following  list  explains  the  meanings  of  the  abbreviations  for 
terms  used  in  this  work : 

Net  30  da.  means  that  the  bill  is  to  be  paid  in  thirty  days  without  discount. 

1/30  means  that  1%  discount  will  be  allowed  if  the  bill  is  paid  within  thirty  days. 

3/10,  net  30  da.  means  that  3%  discount  will  be  allowed  if  the  bill  is  paid  within 
ten  days,  or  the  amount  of  the  bill  will  be  due  in  thirty  days  without  discount. 

Benj.  P.  Freeman  &  Co.,  924  East  St.,  City,  order  the  following 
goods : 

12  #170  Eng.  Clothes  Poles  12  #495  W.  Iron  Bedsteads 

5  #245  Cedar  Chests  25  #821  Parlor  Lamps 

Fill  the  order.    Terms:  sight  draft  hi  10  da.,  less  3%. 

Make  out  the  bill,  have  it  approved  by  the  instructor,  and  then 
copy  it  into  the  sales  book.  Do  not  deduct  the  discount  on  the  bill 
nor  in  the  sales  book.  Draw  a  sight  draft  in  favor  of  yourself,  dating 
it  10  da.  ahead. 

Draw  the  draft  for  the  net  amount  of  the  bill ;  that  is,  take  out  the  3%. 

Remember  that  this  is  drawn  as  a  sight  draft,  but  it  is  dated  10  da.  ahead  of  the 
date  you  are  working  on. 

On  July  15  instructions  will  be  given  for  the  collection  of  this  draft  by  The 
Union  Bank. 


SET  V.    JOBBING  FU  UN  ITU  RE  BUSINESS  213 

July  8 

Walker,  Brown  &  Co.,  Albany,  order:  % 

5  #20  D  Parlor  Cabinets  10  #835  Music  Cabinets 

24  #176  c  Piano  Chairs  15  #821  Parlor  Lamps 

Fill  the  order.     Terms:   draft  at  30  da,  from  date. 

The  goods  called  for  in  the  above  order  will  be  sent  by  freight,  and 
it  will  be  necessary  for  you  to  prepare  a  bill  of  lading  and  the  duplicates, 
the  shipping  order,  and  the  memorandum. 

Study  carefully  the  following  illustration  and  the  explanation.  This  is  a  new 
feature  of  your  work ;  be  sure  you  understand  it  thoroughly. 

In  the  box  of  business  forms  there  is  a  pad  of  bill  of  lading  blanks,  and  full 
instructions  for  using  this  form.  Use  the  pad  marked  Strait///!,  BUI  of  Lading. 


Order  Bills  of  Lading.  Refer  to  the  explanation  of  the  straight  bill 
of  lading  given  on  page  178  before  reading  the  following  paragraphs. 
Study  these  instructions  with  care. 

The  order  bill  of  lading  is  also  drawn  up  in  a  set  of  three  papers, 
but  in  this  form  the  bill  of  lading  must  be  printed  on  yellow  paper 
and  the  duplicates  on  blue  paper.  The  order  bill  of  lading  is  negotiable 
by  indorsement,  and  is  extensively  used  in  the  shipping  of  freight  that 
is  not  to  be  delivered  until  it  is  paid  for. 

When  the  order  bill  of  lading  is  used,  the  shipment  is  termed  a 
shipper  s  order,  and  is  recorded  as  a  C.  O.D.  account. 

When  an  order  bill  of  lading  is  used,  it  is  customary  to  draw  a  sight 
draft,  attach  it  to  the  bill  of  lading,  and  make  the  collection  through  a 
bank.  The  name  of  the  bank  is  written  after  Consigned  to  Order  of,  and 
the  name  of  the  consignee  after  Notify.  The  consignee  cannot  get  the 
bill  of  lading  until  he  pays  the  draft,  and  he  cannot  get  the  goods 
until  he  surrenders  the  bill  of  lading.  For  this  reason,  the  shipper's 
order  is  a  C.O.D.  transaction. 


Prepare  the  straight  bill  of  lading  and  the  duplicates ;  sign  the  ship- 
ping order  and  the  duplicates,  and  then  have  the  instructor  or  the 
freight  agent  sign  the  bill  of  lading  and  the  memorandum.  Place  the 
bill  of  lading  with  the  invoice,  inclose  both  in  an  envelope  addressed 
to  Walker,  Brown  &  Co.,  and  hand  it  in.  The  shipping  order  should 
be  left  with  the  freight  agent,  and  the  memorandum  placed  on  lile  by 
the  shipper. 


214  PRINCIPLES  OF  BOOKKEEPING 

The  bill  of  lading  must  be  used  in  connection  with  all  out-of-town  shipments, 
the  straight  bill  of  lading  for  general  orders,  and  the  order  bill  of  lading  for  all 
orders  «that  are  not  to  be  delivered  until  the  goods  are  paid  for.  Observe  this 
distinction  carefully. 

Draw  a  draft,  in  favor  of  yourself,  payable  30  da.  from  the  date  of 
the  invoice.  Indorse  the  draft  properly  and  leave  it  with  your  bank 
for  acceptance  and  collection. 

It  should  be  borne  in  mind  that  Walker,  Brown  &  Co.  have  agreed  to  accept  the 
draft,  and  it  will  be  honored  in  due  course. 

Make  no  entry  in  the  check  book.  Some  banks  make  a  memorandum  entry  in 
the  pass  book  for  paper  left  for  collection,  but  do  not  extend  the  amount  into  the 
money  column. 

The  journal  entry  will  be  made  when  the  bank  informs  you  that  the  draft  has 
been  accepted. 

The  straight  bill  of  lading  will  be  used  unless  you  are   otherwise  instructed. 

Leave  W.  D.  Rimbach's  acceptance  at  the  bank  for  collection. 
Indorse  it  and  record  in  the  Date  sent  to  Collect  column  of  the  notebook. 

July  0 

J.  E.  Bender,  Troy,  has  agreed  to  honor  your  sigh't  draft,  in  favor 
of  Stoddard  &  Co.,  for  $300. 

Write  the  draft  and  the  letters,  and  hand  them  in.  Make  the  proper  entry  in 
the  journal. 

The  Metropolitan  Carting  Co.  has  delivered  to  you  the  goods  ordered 
of  Cobb,  Bates  &  Co.  on  July  3. 

Look  up  the  invoice,  Form  4.    Enter  it  in  the  purchase  book. 


Entries  in  Purchase  Book.     In  entering  purchases  in  the  purchase 
book  observe  the  following : 

1.  In  actual  business  never  enter  a  bill  in  the  purchase  book  until 
the  goods  have  been  received.    Sometimes  it  may  happen  that  more 
than  one  bill  is  sent  for  the  same  goods,  or  perhaps  a  bill  is  sent  and 
the  goods  are  not  delivered. 

2.  When   the   goods  have  been  received,  the  invoice  for  the  same 
should  be  cheeked. 

3.  If  everything  called  for  in  the  invoice  has  been  received,  then 
the  bill  should  be  compared  with  the  order  to  find  out  whether  or  not 
you  have  received  the  goods  you  ordered. 

4.  If  the  items  on  the  bill  agree  with  the  order,  next  observe  if  the 
prices  and  the  terms  are  what  you  bargained  for. 


SET  V.    JOBBING  FU11NITUKE  BUSINESS  215 

5.  Examine  all  the  extensions  of  the  invoice  carefully,  and,  if  every- 
thing is  found  to  be  correct  in  every  detail,  record  it  in  the  purchase 
book. 

6.  If   the   checking   shows    any   irregularities    on  the  bill   or  in  the 
goods  received,  do  not  record  it  in  the  purchase  book,  but  hold  it,  and 
immediately  notify  the  persons  of  whom  you  are  purchasing  the  goods, 
and  await  their  reply. 


The  goods  ordered  of  the  Derby  Manufacturing  Co.  have  been 
delivered. 

Look  up  the  invoice,  Form  5,  and  the  draft  sent  with  it,  Form  6.  Record  the 
invoice  in  the  purchase  book.  Accept  the  draft,  payable  at  The  Union  Bank,  and 
make  the  journal  entry.  Record  the  acceptance  in  the  notebook.  Place  the  draft 
in  an  envelope,  address  it,  and  hand  it  in. 

No  deduction  is  made  on  the  face  of  the  invoice  ;  every  invoice  is  to  be  entered 
in  the  purchase  book  at  its  face  value. 

The  following  is  the  proper  form  of  journal  entry  for  the  acceptance  : 

Derby  Mitf.  Co. 

'    Mdse.  Disc,  on  Purchases 
Xotes  Payable 

The  Union  Bank  reports  that  Walker,  Brown  &  Co.  has  accepted 
your  draft  for  the  amount  of  the  invoice  of  Jvl;i  8. 

Make  the  entry  in  the  journal,  and  record  in  the  notebook.  Refer  to  the  model 
notebook,  pages  196  and  197. 

W.  D.  Rimbach's  acceptance  has  been  collected.  Have  the  amount 
recorded  in  your  pass  book,  and  make  the  record  in  the  check  book. 
The  following  memorandum  may  be  entered  on  the  reverse  stub  of  the 
check  book. 


Credit  JVotes  Receivable  on  the  left  side  of  the  cashbook.    Mark  the  note  Paid  in 
the  notebook. 

July  76> 

Pay  by  check  J.  O.  Moran's  sight  draft  on  you,  in  favor  of  himself, 
for  $200,  Form  7. 

Write  the  check  and  make  the  cashbook  entry.    Hand  in  all  outgoing  papers. 


216  PRINCIPLES  OF  BOOKKEEPING 

Samuel  W.  Bradley,  126  James  St.,  Bedford,  orders  the  following 
goods.  The  order  is  filled  at  the  prices  given  herewith : 

5  #3116  A.  Card  Tables  at  §19.75        3  #1008  0.  Sideboards  at  $195 

6  #687  O.  Tables  at  $5.25  5  #169  c  Library  Tables  at  $25 

Terms:  draft  at  30  da.,  drawn  in  favor  of  yourself. 

Write  the  draft  and  have  it  approved.  Inclose  the  invoice,  the  bill  of  lading, 
and  the  draft  in  an  addressed  envelope,  and  hand  it  in.  Make  no  entry  for  the 
draft  until  it  has  been  returned  accepted. 

July  11 

Telegraph  Randall  Manufacturing  Co.,  126  East  126th  St.,  New 
York,  ordering: 

.    50  #65  Turkish  Rockers  10  #57  Reclining  Couches 

5  #73  Sofa  Beds 

Do  not  use  more  than  twenty  words  for  the  message. 

Pay  75  £  charges  in  currency.    Debit  Sundry  General  Expense  in  the  cashbook. 

NOTE.    The  telegram  is  illustrated  and  discussed  in  Appendix  F. 

July  12 
J.  E.  Bender,  127  Main  St.,  Troy,  orders : 

15  #396  Mahogany  Hall  Stands  9  #68  Oak  Bookcases 

10  #76  A  Oak  Chamber  Sets 

Fill  the  order.    Terms:  3/5,  2/10,  net  30  da. 
Prepare  the  bill  of  lading  as  under  July  8. 

July  13 

Receive  a  check  from  J.  E.  Bender  for  the  amount  of  the  invoice  of 
July  12,  less  3%,  Form  8. 

Enter  the  check  on  the  left  side  of  the  cashbook.  Refer  to  the  second  entry  in 
the  model  cashbook,  under  Cash  Received,  page  198. 


Merchandise  Discount.  This  discount  is  an  allowance  for  the  pay- 
ment of  an  invoice  within  a  specified  time  from  its  date.  It  is  usually 
the  result  of  giving  optional  terms  of  settlement  to  the  buyer,  as  3/10, 
1/30,  n/60;  that  is,  a  reduction  of  3%  if  payment  is  made  within 
10  da.,  or  1%  if  paid  after  the  10  da.  and  within  30  da.,  or  the  face 
of  the  bill  if  payment  is  made  after  the  30  da.  and  within  60  da. 

Merchandise  Discount  is  entered  as  follows:  that  which  is  allowed 
on  purchases  as  Merchandise  Discount  on  Purchases;  that  which  is 
allowed  on  sales  as  Merchandise  Discount  on  Sales. 


SET  V.    JOBBING   FUKNITU11E  BUSINESS  217 

Because  the  buyer  has  this  option  the  invoice  is  billed  without  reduction,  as  it 
is  not  known  which  option  the  buyer  will  choose.  If  he  pays  within  the  time  for 
which  the  discount  is  allowed,  a  record  is  made  of  this  discount  as  a  regular  entry, 
under  the  title  Merchandise  Discount  on  S<t/cx. 


July  lo 

The  Metropolitan  Carting  Co.  has  delivered  the  goods  shipped  to 
you  by  W.  H.  Stearns  &  Co.,  Chicago,  111.,  Form  0.  Accept  the  draft, 
payable  at  The  Union  Bank,  Form  10,  place  it  in  an  envelope  addressed 
to  W.  H.  Stearns  &  Co.,  and  hand  it  in. 

Samuel  W.  Bradley,  Bedford,  returns  your  draft  of  July  10,  on  him, 
accepted,  Form  11,  together  with  a  note,  Form  12,  payable  30  da.  from 
July  12,  made  by  J.  E.  Farley,  City,  in  favor  of  Samuel  W.  Bradley, 
for  $179.  Form  12  is  transferred  to  you  by  full  indorsement. 

Make  the  journal  entry  for  the  draft  and  the  note,  and  then  record  them  in  the 
notebook.  Place  them  in  the  Unpaid  Bills  envelope. 

Leave  the  sight  draft  of  Benj.  P.  Freeman  &  Co.  at  The  Union 
Bank  for  collection. 

Refer  to  the  sale  to  them  on  July  6. 

Telegraph  S.  T.  Udell  &  Co.,  Chicago,  111.,  asking  them  to  ship  you 
by  fast  freight : 

11  #10  China  Closets  19  #50  M.  Parlor  Tables 

Limit  the  message  to  fourteen  words.    Pay  75$  charges  in  currency. 
Debit  Sundry  General  Expense  in  the  cashbook. 

July  JO 
G.  H.  Ingalls  &  Co.,. Springfield,  order: 

25  #20  Corner  Chairs  25  #17  A  lloman  Chairs 

They  inclose  a  New  York  draft  to  cover  the  cost  of  the  order, 
Form  13. 

Fill  the  order.    Terms:  cash,  less  3%. 

Write  the  invoice,  but  do  not  deduct  the  3%  allowance  for  cash. 
Prepare  the  straight  bill  of  lading  and  the  duplicates,  in  the  usual  form. 

Enter  the  draft  and  the  discount  in  the  cashbook. 

Give  Cobb,  Bates  &  Co.  a  check  for  the  invoice  of  July  6,  less  the 
discount  allowed  for  prompt  payment. 

The  cashbook  entry  will  be  the  same,  except  the  amounts,  as  the  fiftli  entry  in 
the  model  cashbook,  under  Cash  Paid,  page  199. 


218 


PRINCIPLES  OF  BOOKKEEPING 


July  17 

Deposit  in  the  bank  the  check  on  hand ;  also,  the  New  York  draft. 
Collection  on  the  check  is  -^  %. 

NOTE.    There  is  no  uniform  custom  in  charging  for  checks,  sight  drafts,  and  the 
various  other  negotiable  instruments  offered  for  collection.    As  a  rule,  no  charge  is 

made  to  a  regular  depositor  for 
collecting  paper  payable  in  the 
city  nor  to  a  customer  who  keeps 
a  large  bank  account.  When 
charges  are  made,  they  range 
from  Jy%  to  ^%.  The  student  will 
be  instructed  when  the  bank 
makes  any  charges. 

Different  sections  of  the  coun- 
try do  not  follow  a  uniform  plan, 
but  it  is  desirable  that  the  stu- 
dent should  be  familiar  with 
handling  these  collection  items. 


THE  UNION  BANK 

DEPOSITED  BY 

LUKE  S.  WARDEN 

July  17,1Q~ 

Please  list  each  check  separately 

Bills 

Gold 

Silver 

Checks 

1140 

15 

511 

20 

278 

75 

1930 

10 

Less   Exchange 

1 

14 

1928 

96 

Make  out  a  deposit  ticket 
and  deduct  the  collection. 
Indorse  each  paper  and  then 
enter  the  deposit  in  the  check 
book. 

Debit  Collection  and  Exchange 
for  the  bank's  charges. 

The  Union  Bank  has  col- 
lected the  sight  draft  on 
Benj.  P.  Freeman  &  Co.  No 
collection  charges. 

As  this  draft  is  for  the  net  amount  of  the  bill,  the  discount  must  be  recorded  in 
the  cashbook ;  it  was  drawn  on  July  6,  the  date  of  the  invoice. 

July  18 

Leave  J.  B.  Maxwell's  note  at  the  bank  for  collection. 

Take  J.  B.  Maxwell's  note  from  the  Unpaid  Bills  envelope,  indorse  it,  and  then 
hand  it  to  the  bank  teller.  No  record  will  be  made  in  the  pass  book  until  the  bank 
reports  the  collection. 

Discount  Samuel  W.  Bradley's  acceptance  for  the  invoice  of  July  10, 
and  receive  credit  for  the  proceeds. 

Take  Bradley's  acceptance  from  the  Unpaid  Bills  envelope,  indorse  it,  and  then 
make  out  a  discount  memorandum  similar  to  the  one  illustrated  on  page  219. 

Compute  the  discount  at  6%. 


SET  V.    JOBBING  FURNITURE  BUSINESS 


219 


Pin  the  discount  memorandum  and  the  acceptance  together,  place  them  in  the  pass 
book,  and  then  hand  it  to  the  bank  teller,  who  will  give  you  credit  for  the  proceeds. 

Enter  the  proceeds  as  a  deposit  in  the  check  book. 

On  the  reverse  stub  of  the  check  book  a  memorandum  may  be  written  giving 
details  regarding  this  discount. 

In  the  cashbook,  remember  to  credit  the  acceptance  for  its  face,  value  ;  debit 
Interest  Paid  for  the  discount.  It  is  of  the  utmost  importance  to  enter  a  discounted 
note  or  acceptance  at  its  face  value. 

In  the  notebook,  in  the  Date  Dis- 
counted column,  write  July  18. 

DISCOUNT  MEMORANDUM 


Term  of  Discount.  The  term  of 
discount  is  the  time  from  the  date 
of  discount  to  the  maturity  of  the 
note.  Banks  differ  as  to  method 
in  finding  the  term,  but  in  this 
text  the  exact  number  of  days  will 
be  used  uniformly. 


Receive  the  goods  ordered  of 
C.  W.  Allen  &  Co.  on  July  3, 
Form  14. 

This  invoice  is  dated  July  9,  the 
date  goods  were  shipped. 


FW      CLf 


Discounted  for 


Proceeds,  $ 


FORM   OF   DISCOUNT   MEMORANDUM 


July  19 

The  Metropolitan  Carting  Co.  has  delivered  the  goods  ordered  of 
William  Leavens  &  Co.,  Form  15. 

Look  up  the  invoice,  Form  15,  and  enter  it  in  the  purchase  book.  You  will  receive 
their  sight  draft  on  you  for  the  net  amount  of  the  invoice  in  15  da. 

Remit  to  C.  W.  Allen  &  Co.  a  check  for  invoice  of  July  9,  less  the 
discount  allowed  for  prompt  payment. 

Also  order  the  following: 

5  #59  A  Cheval  Glasses  17  #572  Drawing-room  Suites 

Write  the  check  and  have  it  approved ;  enter  it  in  the  cashbook.  Write  a  letter, 
inclosing  the  check  and  ordering  the  goods. 

Your  acceptance  in  favor  of  Derby  Manufacturing  Co.,  made  payable 
at  your  bank,  is  due  to-day. 

Issue  a  check  in  payment. 

Enter  the  amount  in  the  check  book ;  include  it  in  the  checks. 

Debit  Notes  Payable  in  the  cashbook.   Mark  the  acceptance  Paid  in  the  notebook. 


220  PRINCIPLES  OF  BOOKKEEPING 

Bank  Charges  for  Notes  or  Drafts.  The  following  paragraphs  explain 
the  circumstances  under  which  a  bank  will  charge  a  depositor  with  a 
note  or  a  draft: 

1.  Banks    are    not    uniform    in    their    practice    of    charging    notes, 
accepted  drafts,  etc.     In  some  places,  notably  in  Chicago  and  several 
other  large  Western  cities,  they  require  their  patrons  to  meet  all  such 
paper  by  check. 

2.  The  practice  followed  by  some  banks  is  to  pay  notes,  acceptances, 
etc.  out  of  a  firm's  deposit,  and   to   charge  the  depositor  the  same  as 
they  would  if  he  had  drawn  a  check.    Court  decisions  and  special  laws  in 
force  in  a  number  of  states  hold   that  notes,  acceptances,  etc.  made 
payable  at  a  bank  are  orders  upon  that  bank  and  may  be  charged  to  a 
depositor's  account  at  maturity  the  same  as  a  regular  check. 

3.  These  special  laws  and  decisions  are  in  operation  in  New  York, 
Massachusetts,  Connecticut,  and  a  few  other  states.     In  these  sections 
many  banks  charge  notes  etc.  to  their  patrons'  accounts  at  maturity. 


July  20 

Your  bank  has  received  cash  for  J.  B.  Maxwell's  note  and  the  inter- 
est due  to-day. 

Enter  the  sum  of  the  note  and  the  interest  as  a  deposit  in  the  check  book. 

Give  Stoddard  &  Co.  your  note  at  15  da.,  dated  July  20,  for  $400, 
payable  at  The  Union  Bank. 

July  22 

Receive  of  E.  F.  Green  &  Co.  a  draft  drawn  in  your  favor,  payable 
60  da.  from  July  14,  on  H.  B.  Claflin  &  Co.,  City,  for  $400,  Form  16. 

Present  the  draft  to  the  instructor ;  he  will  give  you  directions  about  having  it 
accepted  for  H.  B.  Claflin  &  Co. 

Receive  the  goods  ordered  of  Randall  Manufacturing  Co.  on  July  11, 
Form  17. 

July  23 

Give  Randall  Manufacturing  Co.  your  check  for  the  amount  of  the 
invoice  dated  July  15,  less  3%. 

July  24 
M.  N.  Overman,  493  King  St.,  Albany,  orders : 

3  #693  Antique  Wardrobes  30  #65  Turkish  Rockers 

3  #73  Sofa  Beds 


SET  V.    JOBBING  FUENITUKE  BUSINESS 


221 


References   are   satisfactory  and  you  till   the  order.     Terms:    3/10, 
1/30,  net  60  da. 

Write  the  invoice  and  have  it  approved,  and  then  record  it  in  the  sales  book. 
Place  the  invoice  and  the  bill  of  lading  in  an  envelope,  and  hand  it  in. 

Receive  a  telegraphic  order  from  Chas.  B.  Lyman,  Springfield,  for 

4  pr.  Blue  Chenille  Curtains  5  pr.  #91  Lace  Curtains    . 

The  goods  are  to  be  shipped  by  express  C.O.D. 
Make  out  a  receipted  invoice ;  enter  it  in  the  sales  book,  as  follows : 


Place  the  invoice  in  a  C.O.D.  envelope?,  fill  it  out  properly,  and  hand  it  in. 
When  posting,  debit  Chas.  P>.  Li/inan  under  C.O.I).  Account.*,  as  follows: 


'7 


July  25 

Your  acceptance  in  favor  of  C.  O.  Bos  well,  and  your  note,  with  inter- 
est for  1  mo.,  in  favor  of  Allen  &  Bailey  Furniture  Co.,  are  due  to-day. 

Issue  checks  in  payment. 

Make  the  entries  in  the  cashbook  and  the  check  book.    Mark  the  acceptance  and 
the  note  Paid  in  the  notebook. 

Receive  the  goods  ordered  of  S.  T.  Udell  &  Co.,  Chicago,  111.,  on 
July  15,  Form  18. 

July  26 
P.  R.  Brown,  Rochester,  orders : 

25  #635  Brass  Bedsteads  25  #6387  Hall  Settles 

Fill  the  order,  subject  to  the  order  of  The  Union  Bank. 


222  PRINCIPLES  OF  BOOKKEEPING 

Write  a  sight  draft  for  the  amount  of  the  invoice,  indorse  it  to  The 
Union  Bank,  attach  it  to  the  bill  of  lading  (which  is  made  out  accord- 
ing to  the  directions  in  the  paragraph  below),  and  then  leave  it  with 
the  bank  for  collection. 

Send  the  invoice  to  your  customer  in  the  usual  way. 

Enter  in  the  sales  book  as  a  C.O.  D.  item.    See  script  illustration  under  July  24. 


Draft  with  Bill  of  Lading  Attached.  For  the  convenience  of  shippers 
when  the  responsibility  or  the  credit  of  the  buyer  is  limited  or  when 
his  business  standing  is  unknown,  railway  and  steamship  companies 
have  provided  a  way  whereby  goods  may  be  sent  by  freight  so  that 
the  buyer  cannot  obtain  possession  of  them  without  first  paying  for 
them.  This  method  is  commonly  known  among  business  men  as  ship- 
per's order,  and  is  analogous  to  C.O.D.  shipments  in  the  express  busi- 
ness, as  explained  in  the  transaction  of  July  24. 

Throughout  the   text,  transactions  of  this   kind  will  be  entered  as 

C.  0.  D.  Accounts. 

•  « 

In  the  shipment  to  P.  R.  Brown  of  July  26  it  will  be  necessary  to  make  out  an 

order  bill  of  lading.  This  form  is  described  on  page  213.  Observe  the  following 
directions : 

After  the  words  Consigned  to  Order  of  write  The  Union  Bank,  and  on  the  line 
following  write  your  address. 

After  Notify  write  P.  R.  Brown,  and  on  the  line  following  write  Rochester,  N.  Y. 

The  collection  will  be  made  by  your  bank  as  follows : 

Your  bank  will  indorse  both  the  draft  and  the  bill  of  lading,  and 
send  them  to  its  correspondent  at  Rochester. 

When  the  Rochester  bank  receives  the  draft,  it  will  notify  Brown. 
If  he  pays  it,  the  bank  will  give  him  the  freight  receipt,  which  receipt, 
when  properly  indorsed  and  given  to  the  transportation  company,  will 
give  him  access  to  the  goods. 

Transportation  companies  will  not  deliver  goods  without  obtaining 
an  order  bill  of  lading,  for  they  would  thereby  render  themselves  liable 
to  the  shippers  should  the  consignee  not  pay  for  the  goods. 


July  27 

Pay  William  Leavens  &  Co.'s  sight  draft,  in  favor  of  themselves,  for 
the  amount  of  the  invoice  dated  July  11,  Form  19. 

Verify  the  amount  of  the  draft  by  comparing  it  with  the  invoice  in  the  purchase 
book.  If  correct,  write  a  check  for  it.  Make  the  cashbook  entry.  Write  Paid  across 
the  face  of  the  draft  and  keep  it  as  a  receipt. 


SET  V.    JOBBING  FUKXITL'KE  BUSINESS  223 

July  ,M 
Receive  returns  for  the  C.O.I),  shipment  of  July  24,  Form  20. 

Take  the  money  out  of  the  C.O.JJ.  envelope  and  place  it  in  the  Business  Cash 
envelope.  (If  the  incoming  business  forms  are  used,  the  envelope  containing  the 
currency  will  be  found  in  the  back  of  the  tablet.) 

Enter  in  the  cashbook.    Refer  to  the  model. 


Receive  a  check  of  David  E.  Teeter,  iu  full  for  the  invoice  of  July  0, 
less  1%,  Form  21. 

Examine  the  check  and  verify  the  amount  before  making  the  entry  in  the 
cashbook. 

Draw  cash,  for  private  use,  $75. 

Enter  in  the  cashbook  under  Dra  icing  account. 

Take  $75  from  the  Business  Cash  envelope  and  place  it  in  the  Per- 
sonal Cash  envelope. 

July  31 

Pay  by  check  the  bill  of  the  Metropolitan  Carting  Co.,  for  freight 
and  drayage  to  date,  $169.25,  Form  22. 

Debit  Freight  and  Cartage  Out,  $38.15,  and  Merchandise  Purchases,  $131.10. 

The  first  of  these  terms  applies  to  the  freight  and  cartage  which  the  business 
has  paid  on  the  merchandise  sold;  the  second,  to  the  freight  and  cartage  paid  on 
the  merchandise  bought. 

Pay  by  check  the  gas  bill  for  the  month,  $7.07,  Form  23. 
Debit  Sundry  General  Expense  for  the  gas  bill. 

Pay  by  check  salaries  to  date,  as  follows: 

Harry  K.  Sutton         $60  Michael  Donovan         §.30 

Harvey  L.  Grant  50  Daniel  L.  Coon  48 

Geo.  W.  Ainsley         840 

Total  the  five  checks,  and  enter  under  Salaries. 

Deposit  David  E.  Teeter's  check   and   all   the  currency   on   hand. 

Closing  the  Work  for  July.  Proceed  to  close  the  month's  work  as 
follows  : 

1.  The  monthly  bank  statement  should  be  made. 

2.  Prove  the  cash,  and  balance  and  post  the  cashbook.    Note  that 
the  first  two  columns,  on  either  side,  balance  the  last  two  columns. 

The  directions  for  posting  the  cashbook  are  given  on  page  198. 


224 


PRINCIPLES  OF  BOOKKEEPING 


in  the  following  order: 

Student,  Investment 1 

Student,  Drawing 

Harvey  L.  Manning,  Investment 

Harvey  L.  Manning,  Drawing 

Profit  and  Loss  3 

Sundry  Expense  Inventories 

Merchandise  Sales 

Interest  Earned 

Merchandise  Discount  on  Purchases 

Merchandise  Purchases 

Salaries 

Freight  and  Cartage  Out 

Delivery  Expense 

Insurance 

Office  Supplies 

Sundry  General  Expense 

Merchandise  Discount  011  Sales 

Interest  Paid 

Collection  and  Exchange 


3.  Open  accounts  in  the  ledger 

Cash 

Notes  Receivable1 

Accounts  Receivable 2 

David  E.  Teeter 

Benj.  P.  Freeman  &  Co. 

Walker,  Brown  &  .Co. 

Samuel  W.  Bradley 

J.  E.  Bender 

E.  F.  Green  &  Co. 

G.  H.  Ingalls  &  Co. 

M.  N.  Overman 

C.O.D.  Accounts 

Chas.  B.  Sherman 

M.  L.  Covey  &  Co. 

J.  B.  Cox  &  Co. 

Foley  Bros. 

Merchandise  Inventory 
Real  Estate 

.    Buildings  and  Fixtures 
Office  Furniture 
Delivery  Equipment 
Notes  Payable1 
Accounts  Payable2 

Cobb,  Bates  &  Co. 

Derby  Mfg.  Co. 

W.  H.  Stearns  &  Co. 

C.  W.  Allen  &  Co. 

William  Leavens  &  Co. 

Randall  Mfg.  Co. 

S.  T.  Udell  &  Co. 

Fowler  Furniture  Co. 

J.  K.  Levy  &  Co. 

J.  0.  Moran 

Paine  Mfg.  Co. 

Stoddard  &  Co. 

NOTE  1.  The  accounts  are  arranged  in  this  order  to  facilitate  the  making  of 
the  statements. 

Accounts  Receivable  is  a  term  applied  to  the  total  amount  due  the  business  on 
personal  accounts ;  Accounts  Payable  is  a  term  applied  to  the  total  amount  owed  by 
the  business  on  personal  accounts.  (The  Proprietor's  account  is  not  included.) 

1  For  these  accounts  allow  one  third  of  a  page  ;  for  all  other  accounts,  one  fourth 
of  a  page. 

2  Do  not  write  Accounts  Receivable  nor  Accounts  Payable  in  your  ledger,  but  the 
names  of  the  persons  and  firms  that  belong  under  these  titles. 

8  Allow  one  full  page  for  this  account. 


SET  V.    JOBBING  FUKNITURE  BUSINESS 


225 


These  terms,  Accounts  Receivable  and  Accounts  Poijulile,  are  to  be  used  in  making 
trial  balances  and  statements  in  subsequent  work  ;  the  result  is  to  shorten  the  work. 

Another  advantage  of  using  the  terms  suggested  in  the  preceding  paragraph  is 
to  give  information  in  summarized  form.  The  important  fact  shown  by  these 
accounts  in  the  statements  is  the  amount  due  the  business  on  account,  and  the 
amount  owed  by  the  business  on  account,  as  single  items,  rather  than  as  a  list  of 
the  individual  debt- 
ors and  creditors. 

Information  pre- 
sented in  concrete 
form  is  always  a 
desirable  feature  in 
good  bookkeeping. 


In  account  wit 


P 


NOTE  2.  Blank 
ruled  pages  are  pro- 
vided at  the  begin- 
ning of  the  ledger 
for  an  index.  Ob- 
serve the  following 
directions  in  prepar- 
ing the  index : 

List  all  titles 
from  the  ledger  al- 
phabetically. 

In  each  individ- 
ual name,  write  first 
the  surname  and 
then  the  Christian 
name;  for  example, 
Burton,  John  L. 

Illustrations  for 
writing  firm  names : 
Brightwood  &  Co., 
John  H. ;  Cobb, 
Bates  &  Co.;  Sherwood  &  Son,  Henry  L.;  The  American  Standard  Heating  Co. 

Write  on  every  other  line,  and  place  the  page  number  of  the  account  immediately 
after  the  name. 

When  an  account  is  transferred  to  a  new  page  in  the  ledger,  the  number  of  this 
page  should  be  written  just  after  the  number  of  the  page  on  which  the  account 
was  first  written,  as  follows :  Merchandise  Inventory,  4,  76,  etc.  The  last  number 
indicates  the  page  on  which  the  open  account  may  be  found,  and  the  series  of  page 
numbers  enables  the  bookkeeper  to  refer  to  any  page  on  which  the  account  stands. 

Any  new  accounts  that  may  be  opened  should  be  written  in  the  index  at  once. 

NOTE  3.  In  this  set  there  will  be  three  accounts  with  merchandise,  as  follows  : 
Merchandise  Inventory,  to  which  post  the  merchandise  item  from  the  opening  journal 
entry;  Merchandise  Purchases,  to  which  post  the  footing  of  the  purchase  book: 
Merchandise  Sales,  to  which  post  the  footing  of  the  sales  book. 


MODEL    FOR    MONTHLY   STATEMENT    OE   ACCOUNT 


226  PRINCIPLES  OF  BOOKKEEPING 

4.  Rule  the  purchase  book  as  usual.     The   closing  entry  is  Mdse. 
Purchases,  Dr.    Post. 

5.  Rule  the  sales  book  as  usual.     The  closing  entry  is  Mdse.  Sales, 
Or.    Post. 

6.  Post  from  the  journal. 

7.  Prove  the  notebook. 

NOTE.  To  prove  the  notebook,  find  the  total  of  the  uncanceled  notes  receivable. 
This  sum  should  agree  with  the  balance  of  the  Xotes  Receivable  account  in  the  ledger. 

In  like  manner  find  the  total  of  the  unredeemed  notes  payable,  and  this  sum 
should  agree  with  the  balance  of  the  Notes  Payable  account  in  the  ledger. 

8.  Prepare    the    monthly    statements    of    the    customers'   accounts. 
Place  them  in  an  envelope  properly  addressed,  and  hand  them  in  for 
approval.    See  model  of  monthly  statement  of  account  on  page  225. 

9.  Take  a  trial  balance  of  the  balances  of  the  ledger  accounts,  and 
hand  it  to  the  instructor  for  approval. 

10.  The  inventory  of  stock  was  completed  by  Harvey  L.  Grant  and 
Harry  K.  Sutton  yesterday.  The  figures  are  given  below. 

Copy  the  inventory  on  a  sheet  of  journal  paper,  in  the  usual  form,  using  the  buy- 
ing price  list  for  the  merchandise.  File  the  sheet  containing  the  inventories. 

Inventories,  July  31,  19 — 
Merchandise : 

5  #3116  A.  Card  Tables  5  #16  L.  Dressing  Cabinets 

17  #2546  A.  Library  Rockers  19  #50  M.  Parlor  Tables 

4  #693  Antique  Wardrobes  20  #626  M.  Office  Chairs 
25  #635  Brass  Bedsteads  10  #396  M.  Hall  Stands 
25  #16  B  Brass  Easels  2  #89  M.  Chamber  Sets 

200  #15  Cane-seat  Dining  Chairs  10  #2229  0.  Dining  Tables 

10  #71  A  Child's  Cribs  12  #73  Oak  Writing  Desks 

10  #20  Corner  Chairs  24  #68  Oak  Bookcases 

9  #16  A  C.  Dining-room  Sets  10  #20  D  Parlor  Cabinets 

15  #10  China  Closets  10  #57  Reclining  Couches 

28  #3016  Fancy  Rockers  12  #73  Sofa  Beds 
12  #36  B  Gentleman's  Chiffoniers  5  #5926  S.  Book  Cabinets 

10  #6387  Hall  Settles  20  #65  Turkish  Rockers 

275  #16  K  L.  Dining  Chairs  24  #27  c  W.-Wire  Mattresses 

5  #169  c  Library  Tables  24  #16  Wool  Mattresses 
10  pr.  #91  Lace  Curtains  12  #495  W.  I.  Bedsteads 

Office  Supplies : 

Unused  supplies  $21.75 

Office  Furniture : 

Depreciation  4.50 


SET  V.    JOBBING  FUKNITUKE  BUSINESS 


227 


Delivery  Equipment : 

Depreciation 
Building  and  Fixtures  : 

Depreciation 
Insurance : 

For  1  mo. 


$6.75 
12.50 


12,50 

No  inventory  of  real  estate  is  given,  as  the  book  value  of  the  account  is  to  be 
used  as  an  asset. 

The  book  value  of  the  account  is  the  value  as  it  appears  on  the  ledger. 

11.  Make  the  profit  and  loss  statement. 

12.  Make  the  balance  sheet  or  financial  statement. 


Statements.    The  following  suggest  the  forms  of  statement  to  be  used 

Student 

PROFIT  AND  Loss  STATEMENT 
For  the  month  of  July,  19 — 


TRADING 
Mdse.  Sales 
Inventory,  July  1                                                         (1384.20 
Purchases  for  July                                                      8488.75 

9856 

25 

14872.95 
Inventory,  July  31                                                    5759.43 

Cost  of  merchandise  sold 

nil:1, 

52 

Gross  profits  on  sales 

OPERATING  EXPENSES 
Freight  and  Cartage  Out 
Salaries 
Insurance,  1  mo. 
Depreciation  on  Delivery  Equipment 
Depreciation  on  Office  Furniture     ' 
Office  Supplies 
Sundry  General  Expense 

82 
142 
20 
7 
4 
17 
5 

35 

50 
25 
00 
35 

742 
279 

73. 
05 

Net  operating  profit 
Add: 
Mdse.  Discount  on  Purchases                                     94.32 
Interest  Earned                                                             13.  55 

107 

87 

463 

68 

Deduct  : 
Mdse.  Discount  on  Sales                                              53.20 
Interest  Paid                                                                  31.15 
Collection  and  Exchange                                               1.20 

85 

55 

22 

32 

Net  Profit  for  July 

480 

228 


PRINCIPLES  OF  BOOKKEEPING 
FINANCIAL  STATEMENT 


ASSETS 
Cash 

Notes  Receivable 
Accounts  Receivable 
Mdse.  Inventory 
Real  Estate 
Building  and  Fixtures 
Delivery  Equipment 

Less  depreciation 
Office  Furniture  : 

Less  depreciation 
Office  Supplies 
Insurance  Unexpired 
Total  Assets 

LIABILITIES 
Notes  Payable 

Accounts  Payable 
Total  Liabilities 

PROPRIETARY  INTEREST 
Student,  Investment,  July  1 
Drawing  : 

Net  Profit  for  July 
Withdrawal 
Proprietary  Interest,  July  31 


425. 

7.50 

425. 
4.25 


486. 


845 
1742 
3895 
5759 
2000 
3500 


417 


420 
21 
91 


1425 
3553 


13304 


411 


IS 


18693 


4978 


13715 


18 


BALANCE  SHEET 


ASSETS 

LIABILITIES 

Cash 

845 

35 

Notes  Payable 

1425 

10 

Notes  Receivable 

1742 

30 

Accounts  Payable 

3553 

40 

Accounts*  Receivable 

3895 

60 

PROPRIETARY  INTEREST 

Mdse.  Inventory 
Real  Estate 

5759 
2000 

43 

Invest.,  July  1                  13304.18 

Building  and  Fixtures 
Delivery  Equip.        425. 
Depreciation             7.50 

3500 
417 
420 

50 
*75 

Drawing  : 
Net  Profit           486. 
Withdrawal          75.        411. 

13715 

18 

Proprietary  Int., 
July  31 

Office  Furn.               425. 
Depreciation             4.25 

Office  Supplies 

21 

75 

Insurance,  Unexpired 

91 

18693 

68 

18693 

68 

SET  V.    JOBBING  FUKNITUKE   BUSINESS 


229 


Discuss  the  following  questions  on  the  Profit  and  Loss  Statement. 

How  would  a  statement  be  arranged  to  show  a  gross  loss  on  sales  ? 

Explain  the  items  chargeable  to  each  of  the  seven  operating  expense 
accounts.  Refer  to  the  Profit  and  Loss  Statement  on  page  227. 

What  is  meant  by  net  operating  profit  ? 

What  is  the  distinction  between  net  operating  profit  and  net  profit*? 

What  is  the  source  of  the  interest  paid  and  the  interest  earned  items  ? 

Distinguish  between  the  merchandise  inventory  of  July  1  and  of 
July  31.  

13.  Hand  the  statements  to  the  instructor  for  approval. 

14.  Close  the  ledger  by  the  journal  method,   as  already  instructed. 


To  close  the  Delivery  Equipment  account  and  the  Insurance  account, 
observe  the  following  suggestions  : 

Assume  that  the  Delivery  Equipment  account  was  valued  at  S400  on 
July  1  and  has  depreciated  $8  during  the  month. 

Make  the  following  entry  to  record  the  depreciation  (the  loss),  as 
treated  in  this  set: 


8 


Profit  and  Loss 

Delivery  Equipment 

To  record  the  depreciation  on  the  De- 
livery Equipment  account. 

After  posting  the  above  entry  balance  the  account. 

Assume  that  the  Insurance  account  appears  on  the  ledger  debited  with 
|144  on  July  1.  The  portion  chargeable  to  each  month  (the  loss)  is  $12. 

Make  the  following  entry  to  charge  the  monthly  premium  and  to 
record  the  inventory  value : 

Profit  and  Loss 

Sundry  Expense  Inventories 

Insurance 

To  close  one  twelfth  of  the  yearly  pre- 
mium into  the  Profit  and  Loss  account 
and  to  record  the  inventory  value. 

After  posting  the  above  entry  rule  the  Insurance  account. 


15.  Make  the  monthly  statement  of  the  bank  account. 

16.  Pass  all  books  to  the  instructor  for  approval. 


230  PRINCIPLES  OF  BOOKKEEPING 

Exercise  58.    Review 

For  Written  Work 

1.  Journalize   orally  or  in    writing   each   transaction   in   the   month 
of  July. 

All  amounts  may  be  omitted,  as  the  value  of  the  exercises  is  in  determining 
debits  and  credits. 

2.  Make   the  following  opening  entries,   referring  to  page   194,  in 
order  to  determine  the  correct  form  of  entry : 

Student  begins  business  this  day  with  the  following  assets  and  liabilities  : 

a.  Cash  in  drawer,  8231.40 

Deposit  in  First  National  Bank,  $1674. 50 
Stock  of  merchandise  valued  at  $9645.50 
The  following  owe  you  011  account : 

Henry  A.  Pell,  $67.50 

Morris  &  Co.,  $253.10 

M.  M.  Bell,  $167.25 

Amos  T.  Young,  $76.45 
You  owe  the  following  on  account : 

Barber  &  Co.,  $56.75 

Young  &  Brown,  $100.50 

Thos.  L.  Parr,  $25.25 

b.  Cash  in  drawer,  $325 

Deposit  in  The  Union  Bank,  $2365.10     . 
Eeal  Estate  valued  at  $1000 
Building  and  Fixtures  valued  at  $3200 
Stock  of  merchandise  valued  at  $11,457.20 
The  following  owe  you  on  account : 

Warren  &  Son,  $176.25 

John  K.  Lamb,  $200 

C.  H.  Hartman,  $423.50 

D.  B.  Vance,  $153.95 

You  owe  the  following  on  account : 

Marshall  &  Co.,  $235 

Henry  Marvel,  $310 

Chas.  L.  Burt,  $65.70 
You  hold  notes  against  the  following : 

H.  T.  Inman,  $125 

L.  L.  Pond,  $250 

Mason  &  Son,  $230 
You  have  the  following  notes  outstanding : 

R.  N.  Banks,  $200 

T.  S.  Little,  $100 


SET  V.    JOBBING   FURNITURE  BUSINESS  231 

c.  Cash  in  drawer,  $410.20 

Deposit  in  the  Second  National  Bank,  81814.25 

Office  Furniture  valued  at  §215 

Coal  valued  at  $49.10 

Office  Supplies  valued  at  $23.50 

Stock  of  merchandise  valued  at  $8092.15 

One  delivery  truck  valued  at  $600 

The  following  owe  you  on  account : 

John  L.  Kinman,  $235.85 

Hart  Bros.,  $35(5.30 

Henry  A.  Morton,  $205 
You  owe  the  following  on  account : 

Lee  &  Mason,  $17(5.50 

Edward  C.  Freeman,  $83.40 

Loomis  &  Co.,  §115.20 

3.  Make  statements  from  each  of  the  following  trial  balances: 

a.  Cash  $3165.50 

Notes  Receivable  270.45 

Accounts  Receivable  1050. 10 

Mdse.  Inventory  3250.10 

•    Real  Estate  2650. 

Building  and  Fixtures  5150.15 

Office  Furniture  125. 

Delivery  Equipment  350. 

Notes  Payable  $1904.25 

Accounts  Payable  2708.55 

John  A.  Smart,  Investment  10018.85 

John  A.  Smart,  Drawing  125. 

Mdse.  Sales  44 SI.  15 

Interest  Earned  53.20 

Mdse.  Discount  on  Purchases  151.95 

Mdse.  Purchases  3074.45 

Salaries  98.35 

Sundry  General  Expense  8-75 

Interest  Paid  42.10 

$19377.95       $19377.95 

Inventories : 

Merchandise  $332.).  4  ( 

Building  and  Fixtures  : 
Depreciation 

Office  Furniture : 
Depreciation 

Delivery  Equipment : 
Depreciation 


232 


PRINCIPLES  OF  BOOKKEEPING 


b.  Cash 

Notes  Receivable 

Accounts  Receivable 

Mdse.  Inventory 

Real  Estate 

Building  and  Fixtures 

Delivery  Equipment 

Notes  Payable 

Accounts  Payable 

L.  S.  Woods,  Investment 

L.  S.  Woods,  Drawing 

Mdse.  Sales 

Interest  Earned 

Mdse.  Discount  on  Purchases 

Mdse.  Purchases 

Office  Supplies 

Fuel 

Mdse.  Discount  on  Sales 

Interest  Paid 

Inventories  : 

Merchandise 
Fuel 

Building  and  Fixtures : 
Depreciation 

Delivery  Equipment : 
Depreciation 


$346.20 
265.70 

1950.75 

5860.40 

1875. 

6854.75 
485. 


150. 


4123.20 

45.90 

123.45 

45.70 

29.50 


$826.55 

1625.40 

11957.65 

7546.50 

54.20 

145.25 


$22155.55       $22155.55 

$3842.25 
25.60 

68.55 
4.85 


CHAPTER  XIX 

SET  V.    JOBBING  FURNITURE  BUSINESS  (CONTINUED) 
PARTNERSHIPS 

Essential  Elements.  A  partnership  is  a  contract  relation  between 
persons  who  combine  their  property,  labor,  or  skill  in  a  business  and 
who  agree  to  share  the  profits  and  the  losses  jointly.  Hence,  a  partner- 
ship, in  order  to  be  legal,  must  have  the  following  essential  elements  of 
a  contract: 

1.  Competent  parties  4.  Consideration   (joint    division    of 

2.  An  agreement  profit  and  loss) 

3.  Lawful  enterprise 

The  agreement  may  be  either  verbal  or  written,  preferably  the  latter. 
When  reduced  to  writing,  the  contract  of  partnership  is  called  the 
Articles  of  Copartnership. 

Usual  Clauses.  The  most  usual  clauses  in  the  articles  of  partnership 
are  as  follows: 

1.  Name  of  the  firm  5.  Capital  to  be  invested,  and  provi- 

2.  Nature  of  the  business  sion  for  its  withdrawal 

3.  Place  of  business  6.  Salaries  to  be  paid  to  the  partners 

4.  Date     of    commencement  and      7.  Interest  on  invested  capital 

duration  of  partnership  8.  Division  of  profit  and  loss 

9.  Provision  for  dissolution 

WORK  FOR  AUGUST 

The  work  for  August,  in  this  set,  is  a  continuation  of  the  work 
of  July. 

Incoming  Business  Forms  for  August.  The  student  is  referred  to 
the  instructions  given  for  the  use  of  the  business  forms  in  the  month 
of  July,  page  205,  of  which  the  following  list  is  a  continuation: 

Form  24.    Check  of   Harvey  L.   Manning,  dated   City,   Aug.    1.   drawn    on 
Traders  National  Bank,  in  favor  of  your  firm,  for  S7000. 

Form  25.    New  York  draft,  dated  City,  Aug.  1,  drawn  by  The  Union  Bunk  on 
Chemical  National  Bank,  in  favor  of  your  firm,  Chas. 
Cashier,  for  $319.72. 

233 


234  PRINCIPLES  OF  BOOKKEEPING 

Form  26.    M.  N.  Overman's  note,  dated  Albany,  Aug.  2,  in  favor  of  your  firm, 

at  30  da.,  for  $469.39. 
Form  27.    Invoice    of   C.    W.   Allen   &   Co.,   Trenton,  N.  J.,  dated  July  31. 

Terms  :  2/30,  net  60  da.    Items  as  follows  : 

17  #572  Drawing-room  Suites  5  #59  A  Cheval  Glasses 

Form  28.    Stoddard  &  Co.'s  sight  draft,  dated  City,  Aug.  3,  on  your  firm,  in 

favor  of  themselves,  for  $150. 
Form  29.    Invoice  of  J.  K.   Levy   &  Co.,   New  York  City,   dated  Aug.  5. 

Terms  :  cash,  less  2  (r/0 . 

15  #693  Antique  Wardrobes 
Do  not  deduct  the  discount  from  the  amount  of  the  invoice. 

Form  30.  New  York  draft,  dated  Olean,  Aug.  10,  drawn  by  The  Union  Bank 
of  Olean,  on  Chemical  National  Bank  of  New  York,  in  favor 
of  M.  L.  Covey  &  Co.,  for  §283.72,  W.  D.  Byron,  Cashier. 
Transferred  to  Student  &  Co.  by  full  indorsement. 

Form  31.  Invoice  of  Cobb,  Bates  &  Co.,  dated  City,  Aug.  15.  Terms :  3/10, 
net  30  da.  Items  as  follows  : 

25  #5932  Empire  Toilet  Tables  18  #1008  Oak  Sideboards 

25  #76  A  Oak  Chamber  Sets 

Form  32.  Invoice  of  Derby  Mfg.  Co.,  dated  City,  Aug.  15.  Terms  :  draft  at 
20  da.  for  the  amount  of  the  bill,  less  2%.  Items  as  follows  : 

5  #16  A  Comp.  Dining-room  Sets  5  #693  Antique  Wardrobes 

10  #89  Mahogany  Chamber  Sets 
Do  not  deduct  the  2%  discount. 

Form  33.  Draft  of  Derby  Mfg.  Co.,  City,  on  your  firm,  in  favor  of  them- 
selves, for  the  amount  of  the  above  invoice,  dated  Aug.  16, 
payable  at  20  days  sight. 

Form  34.  Invoice  of  C.  -W.  Allen  &  Co.,  dated  Trenton,  N.  J.,  Aug.  12. 
Terms  :  2/30,  net  60  da.  Items  as  follows  : 

20  pr.  Blue  Chenille  Curtains  20  pr.  #91  Lace  Curtains 

Form  35.  Check  of  David  E.  Teeter,  dated  City,  Aug.  20,  drawn  on  Traders 
National  Bank,  in  favor  of  Student  &  Co.,  for  $589.30. 

Form  36.    Bill  of  Ward,  Macey  &  Co.,  dated  City,  Aug.  17,  for  1  letter  file 

and  cabinet,  $65.    Terms  :  cash. 
Receipt  the  bill. 

Form  37.  Check  of  J.  E.  Bender,  dated  Troy,  Aug.  19,  drawn  on  Traders 
National  Bank,  in  favor  of  your  firm,  for  $920.95. 

Form  38.    Bill  of  Tracy  Coal  Co.  to  Harvey  L.  Manning,  dated  Aug.  20,  for 

3  T.  coal  at  $5.    Terms  :  cash. 
Receipt  the  bill. 


SET  V.    JOBBING  FURNITURE  BUSINESS 


235 


Form  39.  Check  of  David  E.  Teeter,  dated  City,  Aug.  24,  drawn  on  Traders 
National  Bank,  in  favor  of  your  firm,  for  §124-8.87. 

Form  40.  C.  O.D.  envelope.  Data  as  follows  :  Cash  inclosed,  $22.  Goods  were 
shipped  by  your  firm  to  J.  W.  Clark,  Waltham,  Aug.  17. 

Refer  to  the  note  under  Form  '20,  page  '207. 

Form  41.  New  York  draft,  dated  City,  Aug.  30,  drawn  by  The  Union  Bank, 
in  favor  of  your  firm,  on  Chemical  National  Bank,  New  York 
City,  for  $438.55,  Chas.  II.  Palmer,  Cashier. 

Form  42.  Bill  of  the  Metropolitan  Carting  Co.,  dated  City,  Aug.  31.  Items 
as  follows  : 

Aug.     1,  Freight  and  Cartage,  $14.50 
16,  Freight  and  Cartage,  $34.50 

22,  Cartage,  $5 

23,  Freight  and  Cartage,  $20.10 
30,  Freight  and  Cartage,  §83.70 

Receipt  the  bill. 

Form  43.  Receipted  bill  of  the  Consolidated  Gas  and  Electric  Light  Co., 
dated  City,  Aug.  31.  Terms:  cash,  less  5^/.  Items  as  follows: 

Meter  at  current  date,  14,300  cu.  ft. 
Meter  at  last  settlement,  8200  cu.  ft. 
Gas  consumed,  6100  cu.  ft.  at  $1.20  per  1000 

Forming  the  Partnership.  You  are  desirous  of  extending  your  busi- 
ness, and  not  having  sufficient  capital  to  do  so,  you  have  decided  to 
enter  into  a  partnership  agreement  with  Harvey  L.  Manning. 

For  the  assets  enumerated  below  you  admit  Harvey  L.  Manning  as 
an  equal  partner  in  your  business. 

Draw  up  articles  of  copartnership  between  yourself  and  Manning, 
embodying  the  following  conditions  (see  Form  II,  Appendix  D)  : 

1.  The  firm  name  shall  be  Student  &  Co. 

2.  Student  shall  contribute  the  net  assets  shown  by  his  July  statement 
of  assets  and  liabilities. 

3.  Manning  shall  invest : 

Cash  $7000 

Merchandise  1500 

Account  with  Foley  Bros,  due  him  5725 

4.  Each  partner  shall  devote  his  entire  time  to  the  business  and  receive 
a  salary  of  $100  per  month. 

5.  Neither  partner  shall  engage  in  any  other  business. 

6.  The  profits  and  the  losses  shall  be  divided  equally. 

7.  The  partnership  shall  continue  for  two  years  unless  sooner  dissolved 
by  mutual  consent. 


236  PRINCIPLES  OF  BOOKKEEPING 

Hand  the  articles  of  copartnership  to  the  instructor  for  his  criticisms 
If  they  are  correct,  he  will  sign  them  for  Harvey  L.  Manning. 
Make  a  copy  of  the  financial 

statement    for   the    month   of 

,.,.,,         ,.  ,        ,.  ARTICLES  OF  COPARTNERSHIP 

July,  attach  it  to  the  articles  or 

i       j 

copartnership,  fold  the  sheets 
together,  and  in  the  outer  right- 
hand  corner  at  the  top  brief  as 
shown  in  the  Model  for  Brief- 
ing herewith. 


Student 

and 

Harvey  L.  Manning 
AUG.  1,  19— 


Opening  the  Work  for  August. 

.  MODEL    FOR    BRIEFING 

The  following  memoranda  of 

transactions  are  for  the  work  of  the  student  during  the  month  of  August : 


MEMORANDA  OF  TRANSACTIONS  FOR  AUGUST 

August  1 

Draw  a  check,  in  favor  of  Student  &  Co.,  on  The  Union  Bank  for 
the  amount  of  the  balance  on  deposit.  Have  the  check  approved,  and 
place  it  in  the  Business  Cash  envelope. 

This  check  is  drawn  in  order  that  the  bank  account  with  the  student  may  be 
closed.  Presently  this  check  will  be  deposited  to  the  credit  of  the  new  firm. 

Receive  Harvey  L.  Manning's  check  on  Traders  National  Bank  for 
the  amount  of  his  cash  investment,  Form  24. 

Make  a  memorandum  in  the  journal,  setting  forth  the  change  in  the  personnel 
of  the  business. 

Make  a  journal  entry  for  the  investment  by  Manning. 

Indorse  the  two  checks  on  hand,  and  deposit  them  in  The  Union 
Bank,  in  the  name  of  the  new  firm. 

Write  a  letter  to  J.  K.  Levy  &  Co.,  27  East  126th  St.,  New  York 
City,  ordering: 

15  #693  Antique  Wardrobes 

Inclose  a  New  York  draft  for  the  amount,  less  2%.  Buy  the  draft 
by  check.  Exchange,  30$. 

Write  the  check. 

Take  the  New  York  draft,  Form  25,  and  indorse  it.  Debit  J.  K.  Levy  fy  Co.  for  the 
face  of  the  draft,  and  enter  the  discount,  $6.53,  in  the  Discount  on  Purchases  column. 

NOTE.  When  a  remittance  is  sent  with  an  order,  the  amount  may  have  been 
determined  by  previous  correspondence,  or  by  reference  to  prices  quoted  in  a 
catalogue  issued  by  the  firm. 


SET  V.    JOBBING   FURNITURE  BUSINESS 

August  2 

Receive  of  M.  N.  Overman  his  note,  in  favor  of  your  firm,  at  30  da. 
from  Aug.  2,  on  account,  for  f 469. 39,  Form  "2(>. 

Chas.  B.  Sherman,  23  West  Ave.,  Rochester,  orders : 

50  #15  Cane-seat  Dining  Chairs  3  #2229  Oak  Dining  Tables 

25  #16  K  Leather-seat  Dining  Chairs          16  #3016  Fancy  Hookers 

References  are  satisfactory  and  you  fill  the  order.  Terms:  sight  draft 
in  30  da.  for  the  amount  of  the  bill,  less  1%. 

Prepare  the  usual  bill  of  lading.  Place  the  invoice  and  the  bill  of  lading  in  an 
addressed  envelope  and  hand  it  in. 

Draw  a  sight  draft,  dating  it  ahead  30  da.,  in  favor  of  yourself,  for  the  amount 
of  the  bill,  less  1%.  Have  the  draft  approved.  It  will  be  left  for  collection  near  the 
close  of  the  month,  just  before  it  is  due. 

The  Metropolitan  Carting  Co.  has  delivered  to  yon  the  goods  ordered 
of  C.  W.  Allen  &  Co.  on  July  W,  Form  27. 

August  3 

Pay  by  check  Stoddard  &  Co.'s  sight  draft,  in  favor  of  themselves, 
for  $150,  Form  28. 

Place  the  draft  in  the  Paid  Bills  envelope. 

David  E.  Teeter,  City,  placed  the  following  order  with  you  over  the 
telephone  this  morning.  The  order  is  filled  at  the  prices  given  herewith  : 

15  #16  B  Brass  Easels  at  $15  19  #68  Oak  Bookcases  at  $9.75 

5  #20  D  Parlor  Cabinets  at  $37 

Terms :   3/5,  1/30,  net  60  da. 

August  5 

Your  note  of  July  20  in  favor  of  Stoddard  &  Co.,  made  payable  at 
the  bank,  was  due  yesterday,  Sunday. 

Issue  a  check  in  payment. 

Enter  in  the  cashbook,  and  make  the  usual  record  in  the  notebook. 

August  7 

Your-  bank  reports  that  the  draft  on  P.  R.  Brown,  attached  to  a  bill 
of  lading,  has  been  collected.  Collection  charges,  $1. 

Have  the  amount  entered  in  the  pass  book,  and  record  it  in  the  check  book.  The 
entry  in  the  cashbook  is  the  same  as  the  entry  of  the  shipment  to  Chas.  B.  Lyman, 
July  24. 

Remember  the  entry  for  the  Collection  and  Exchange. 


238  PRINCIPLES  OF  BOOKKEEPING 

The  Metropolitan  Carting  Co.  has  delivered  to  you  the  goods  ordered 
of  J.  K.  Levy  &  Co.  on  Aug.  1,  Form  29. 
Draw  a  eash  check  for  office  expenses,  $25. 

At  the  bank,  when  you  receive  the  money,  ask  for  $5  in  change. 

The  money  received  on  this  check  is  placed  in  the  cash  drawer,  and  no  entry 
is  made.  As  it  is  paid  out  for  small  charges,  like  telegrams,  expressage,  etc.,  the 
entries  will  be  made. 

Leave  J.  E.  Farley's  note,  received  July  lo,  with  the  bank  for 
collection. 

August  8 

Telegraph  C.  W.  Allen  &  Co.,  Trenton,  X.  J.,  ordering : 

20  pr.  Blue  Chenille  Curtains  20  pr.  #91  Lace  Curtains 

Pay  the  charges  in  cash,  60  0. 
Limit  the  message  to  fifteen  words. 

The  acceptance  of  Walker,  Brown  &  Co.,  drawn  on  July  8  and 
left  with  The  Union  Bank  for  collection,  has  been  paid.  Collection 
charges,  750. 

The  bank  teller  will  make  the  proper  record  in  the  pass  book.    Enter  in  the 
check  book  and  in  the  cashbook. 
Make  the  record  in  the  notebook. 

Acceptance  in  favor  of  W.  H.  Stearns  &  Co.  is  due  to-day,  payable 
at  the  bank. 

Issue  a  check  in  payment. 

August  10 

J.  E.  Bender,  Troy,  sends  the  following  order.  Fill  the  order  at  the 
prices  given  herewith: 

50  #15  C.  Dining  Chairs  at  $2.25  5  #495  W.  Iron  Bedsteads  at  $5 

10  #16  Wool  Mattresses  at  $4  5  #65  Turkish  Rockers  at  $24.75 

50  #16  K  L.  Dining  Chairs  at  $9.50        3  #73  Sofa  Beds  at  $38 
3  #626  Mahogany  Office  Chairs  at  $16.50 

Terms :  3/5,  2/10,  net  30  da. 

•M.  L.  Covey  &  Co.,  Olean,  order: 

3  #396  Mahogany  Hall  Stands  2  #68  Oak  Bookcases 

3  #20  Corner  Chairs 

Fill  the  order.    Terms:  cash,  less  3%. 

Do  not  deduct  the  discount  on  the  invoice  nor  in  the  sales  book.  Prepare  the  bill 
of  lading  as  usual. 


SET  V.    JOBBING  FUKXITl-RE   BUSINESS  239 

A  New  York  draft  was  inclosed  in  payment  of  the  order,  Form  30. 
Make  a  cashbook  entry  for  the  draft. 


7,? 

Your  bank  lias  collected  J.  E.  Farley's  note,  due  yesterday. 
Take  your  pass  book  to  the  bank  and  receive  credit  for  the  amount, 
NOTE.    But  few  special  instructions  will  be  given  to  the  student  for  entering  tin- 
transactions  of  this  month.     He  is  supposed  to  be  sufficiently   familiar  with  tin- 
different  books  and  the  various  transactions  recorded  therein  to  proceed  without  a 
guide.    If  in  doubt  at  anytime,  lie  should  consult  the  instructor. 

Auf/nst  lo 

Place  the  following  orders  over  the  telephone: 
Cobb,  Bates  &  Co.,  City: 

25  #5932  Empire  Toilet  Tables  25  #76  A  <  >ak  (  'number  Sets 

18  #1008  Oak  Sideboards 

Derby  Manufacturing  Co.,  City  : 

10  #89  Mahogany  Chamber  Sets  5  #693  Antique  Wardrobes 

5  #16  A  Complete  Dining-room  Sets 

NOTE.  Some  memorandum  should  be  made  of  each  order  placed  as  above.  When 
these  orders  are  frequent,  a  special  order  book  is  used.  In  this  set  the  memoranda 
for  all  orders  placed  over  the  telephone  may  be  written  on  a  sheet  of  paper  and  filed 
with  the  incoming  papers. 

August  16 

Give  Stoddard  &  Co.  your  note  at  20  da.,  payable  at  The  Union 
Bank,  for  $1500,  on  account. 

You  have  received  the  goods  ordered  of  Cobb,  Mates  &  Co.  on 
Aug.  13,  Form  31. 

Goods  ordered  of  Derby  Manufacturing  Co.  on  Awj.  J^  have  been 
delivered,  Form  32. 

Accept  the  draft  which  they  inclosed,  payable  at  The  Union  Mank. 
Form  33. 

The  goods  ordered  of  C.  W.  Allen  &  Co.  on  Aw/.  <V  have  been  deliv- 
ered, Form  34. 

August  17 

A  telegraphic  order  has  been  received  from  J.  W.  Clark,  Walt  ham, 
for: 

2  pr.  #91  Lace  Curtains  2  pr.  Blue  Chenille  Curtains 

The  goods  are  to  be  shipped  by  express  C.  O.D. 


240  PRINCIPLES  OF  BOOKKEEPING 

Auf/nst  W 

David  E.  Teeter,  City,  lias  given  you  the  following  order  over  the 
telephone.  Fill  the  order  at  the  prices  given  herewith : 

5  #5932  E  Toilet  Tables  at  $50        10  #693  Antique  Wardrobes  at  $25.75 
3  #396  M.  Hall  Stands  at  $65  3  #1008  Oak  Sideboards  at  $195 

Terms :   3/5,  1/30,  net  60  da. 

Aut/iist  20 

Receive  of  David  E.  Teeter  his  check  for  the  invoice  of  Aug.  3, 
less  1%,  Form  35. 

Pay  by  check  Ward,  Macey  &  Co.'s  bill  for  1  letter  file  and  cabinet, 
for  use  in  the  office,  $65,  Form  36. 

Debit  Office  Furniture. 

Pay  by  check  Charles  B.  Hanley  for  sundry  repairs,  $10.50. 
Receive  of  J.  E.  Bender,  Troy,  his  check  for  the  invoice  of  Aug.  10, 
less  2%,  Form  37. 

August  22 

Draw  a  draft,  payable  at  sight,  on  J.  E.  Bender,  for  the  amount  you 
owe  W.  H.  Stearns  &  Co. 

Write  a  letter  to  W.  II.  Stearns  &  Co.  and  inclose  the  draft.  Also  write  a  letter 
to  J.  E.  Bender,  informing  him  of  the  draft  drawn.  Refer  to  the  letters  under  July  5. 

Pay  by  check  Tracy  Coal  Co.'s  bill  for  coal  for  private  use  of 
Harvey  L.  Manning,  $15,  Form  38. 

Deposit  the  checks  and  the  New  York  draft  011  hand. 

August  24 

Receive  of  David  E.  Teeter  his  check  for  the  amount  of  the  bill  of 
Aug-  19,  less  3%,  Form  39. 

Give  Cobb,  Bates  &  Co.  a  check  for  the  invoice  of  Aug.  15,  less  3%. 

August  26 
Benj.  P.  Freeman  &  Co.,  City,  order: 

5  #10  China  Closets  10  #16  Wool  Mattresses 

5  #495  White  Iron  Bedsteads  5  #65  Turkish  Rockers 

2  #5926  Secretary  Book  Cabinets 

Fill  the  order.    Terms:  sight  draft  in  10  da.  for  the  amount,  less  3%. 
Instructions  regarding  this  sight  draft  will  be  given  just  before  it  is  due. 


SET  V.    JOBBING  FURNITURE  BUSINESS  241 

August  27 

A  telegraphic  order  has  been  received  from  Henry  L.  Miller,  Provi- 
dence, for: 

15  #5932  Empire  Toilet  Tables  15  #1008  Oak  Sideboards 

Fill  the  order,  subject  to  the  order  of  The  Union  Bank,  less  2%. 
Do  not  deduct  the  discount  on  the  invoice. 
Which  form  of  the  bill  of  lading  are  you  to  use  ? 

August  29 

Receive  the  returns  from  the  C.O.D.  shipment  of  Aug.  77,  Form  40. 
Write  a  letter  to  C.  W.  Allen  &  Co.,  Trenton,  N.J.,  ordering  the 
following : 

50  #176  c  Piano  Chairs  25  #835  Music  Cabinets 

50  #170  English  Clothes  Poles  20  #(W87  Hull  Settles 

August  30 

Leave  the  note  of  M.  N.  Overman  with  the  bank  for  collection. 

Deposit  the  check  received  of  David  E.  Teeter  on  Aug.  24,  and 
currency,  $20. 

You  receive  frequent  calls  for  a  line  of  furniture  manufactured  by 
the  Fowler  Furniture  Co.,  Rochester.  From  their  catalogue  you  have 
made  the  following  selections : 

10  #687  Ornamental  Tables  10  #245  Cedar  Chests 

10  #2229  Oak  Dining  Tables  15  #17  A  Roman  Chairs 

Write  a  letter,  ordering  the  above  goods  and  inclosing  a  New  York 
draft  to  cover  the  amount,  less  2%.  Give  references  and  some  infor- 
mation about  the  volume  of  your  business. 

The  volume  of  business  is  shown  by  the  total  sales. 

Write  the  check  and  receive  the  draft,  Form  41.  No  collection  charge 
for  the  draft. 

Leave  the  sight  draft  on  Chas.  B.  Sherman  at  The  Union  Bank  for 
collection. 

August  31 

Give  each  partner  a  check  for  $100,  his  monthly  salary. 
Pay  by  check  the  bill  of  the  Metropolitan  Carting  Co.,  for  freight 
and  cartage  to  date,  $163.80,  Form  42. 

Debit  Merchandise  Purchases,  $122.60;  Freight  and  Cartage  Out,  SH.'JO. 


242  PRINCIPLES  OF  BOOKKEEPING  • 

Pay  by  checks  salaries  to  date  as  follows : 

Harry  K.  Sutton         f  60  Michael  Donovan         $30 

Harvey  L.  Grant  50  Daniel  L.  Coon  48 

Geo.  W.  Ainsley         $40 

Pay  by  check  the  gas  bill  for  the  month  of  August,  f  6.95,  Form  43. 

Closing  the  Work  for  August.    The  student  should  now  proceed  to 
close  the  work  for  this  month  as  follows : 

1.  Have   the   monthly  bank  statement  made,   and  compare   it  with 
the  check  book. 

2.  Rule,  foot,  and  post  the  sales  book  and  the  purchase  book. 

3.  If  the  cash  proves,  balance  and  post  the  cashbook. 

4.  Prove  the  notebook. 

5.  Make  out  monthly  statements  for  the  customers. 

6.  Make  a  trial  balance  of  the  balances  of  the  ledger  accounts,  and 
hand  it  to  the  instructor  for  approval. 

7.  An   inventory   of    everything   on    hand   has    been    completed   by 
Mr.  Sutton.    A  statement  of  it  follows. 

Make  the  extensions  at  the  cost  prices,  on  a  sheet  of  journal  paper,  and  file  for 
subsequent  reference. 

Inventories,  August  31,  19 — 
Merchandise : 

17  #2546  A.  Library  Eockers  28  pr.  #91  L.  Curtains 

5  #3116  Antique  Card  Tables  17  #626  M.  Office  Chairs 

14  #693  A.  Wardrobes  19  #50  M.P.  Tables 

10  #16  B  B.  Easels  4  #396  M.  Hall  Stands 

25  #635  B.  Bedsteads  22  #89  M.  Chamber  Sets 

18  pr.  B.C.  Curtains  25  #76  A  0.  Chamber  Sets 
100  #15  Cane-seat  Dining  Chairs  7  #2229  O.D.  Tables 

5  #59  A  Cheval  Glasses  12  #73  Oak  W.  Desks 

10  #71  A  Child's  Cribs  .    3  #68  0.  Bookcases 

7  #20  Corner  Chairs  5  #20  D  Parlor  Cabinets 

10  #10  China  Closets  10  #57  Eeclining  Couches 

27  #16  A  C.D.  Sets  9  #37  Sofa  Beds 

17  #572  Drawing-room  Suites  3  #5926  Sec.  Book  Cabinets 

5  #5932  Empire  Toilet  Tables  10  #65  Turkish  Rockers 

12  #3016  Fancy  Rockers  24  #27  c  W.-wire  Mattresses 

12  #36  B  G.  Chiffoniers  4  #16  Wool  Mattresses 

10  #6387  Hall  Settles  2  #495  W.  Iron  Bedsteads 

.200  #16  K  L.D.  Chairs  5  #16  L.D.  Cabinets 
5  #169  c  Library  Tables 


SET  V.    JOBBING   FURNITURE  BUSINESS 

|8.50 


243 


Office  Supplies 
Office  Furniture  : 

Depreciation 
Delivery  Equipment  : 

Depreciation 
Building  and  Fixtures  : 

Depreciation 
Insurance  for  1  mo. 


5.15 
6.75 

12.50 
12.50 


8.  Make  the  statements.     Have  them  approved. 
Record  them  in  Blank  No.  1,  on  the  page  indicated  by  the  index. 

9.  If  the  statements  are  correct,  close  the  ledger. 

This  month  the  business  has  been  conducted  as  a  partnership,  and  the  following 
entries  should  be  made  to  close  the  Profit  and  Loss  account : 

Profit  and  Loss 

Student,  Drawing 

H.  C.  Mack,  Drawing 
To    divide  the   balance   of   the    Profit 
and  Loss  account,  representing  the  net 
profit  of  the  period,   between  the  part- 
ners in  the  agreed  proportion. 

10.  Rule  the  personal  accounts  that  balance. 

11.  Hand  all  books  to  the  instructor  for  approval. 


KINDS  OF  ACCOUNTS 

There  are  two  kinds  of  accounts, — real  accounts  and  nominal  accounts. 

Real  Accounts.  Real  accounts  are  those  which  represent  actual  values  ; 
upon  the  books  of  a  concern  they  represent  values  owned  or  owed. 
These  accounts  represent  pure  exchange  transactions  in  the  kind  of 
goods  owned  or  owed,  and  they  appear  on  the  financial  statement 
taken  at  the  end  of  a  period  to  show  the  financial  condition  of  the 
business. 


In  this  set  the  real  accounts  are 

Cash 

Notes  Receivable 
Accounts  Receivable 
Merchandise  Inventory 
Real  Estate 
Building  and  Fixtures 
Office  Furniture 


Notes  Payable 

Accounts  Payable 

Student,  Investment 

Student,  Drawing 

Harvey  L.  Manning,  Investment 

Harvey  L.  Manning,  Drawing 


244 


PRINCIPLES  OF  BOOKKEEPING 


Nominal  Accounts.  Nominal  accounts  are  those  which  relate  to  the 
condition  of  the  business  within  itself.  They  are  the  accounts  neces- 
sary for  the  conduct  of  the  business  and  represent  profit  and  loss 
transactions.  Nominal  accounts  are  closed  into  the  Profit  and  Loss 
account,  at  the  end  of  each  period. 

In  this  set  the  nominal  accounts  are : 


Merchandise  Sales 

Interest  Earned 

Merchandise  Discount  on  Purchases 

Merchandise  Purchases 

Salaries 

Freight  and  Cartage  Out 


Insurance 

Office  Supplies 

Sundry  General  Expense 

Interest  Paid 

Merchandise  Discount  on  Sales 

Collection  and  Exchange 


Delivery  Expense 

NOTE.  The  accounts  with  Merchandise  Sales  and  Merchandise  Purchases  are  in- 
cluded as  nominal  accounts  for  the  purpose  of  classification.  Both  of  these  accounts 
are  used  in  connection  with  the  inventories  in  determining  the  gross  profit  or  the 
gross  loss  on  the  merchandise  sold. 

Exercise  59.    Review 


For  Written  Work  and  Discussion 


1.  Make  the'  statements  from  the 

Cash 

Notes  Receivable 

Accounts  Receivable 

Mdse.  Inventory 

Real  Estate 

Building  and  Fixtures 

Office  Furniture 

Delivery  Equipment 

Notes  Payable 

Accounts  Payable 

Wilson  A.  Brant,  Investment 

Wilson  A.  Brant,' Drawing 

Harold  D.  Casey,  Investment 

Harold  D.  Casey,  Drawing 

Mdse.  Sales 

Interest  Earned 

Mdse.  Discount  on  Purchases 

Mdse.  Purchases 

Mdse.  Discount  on  Sales 

Sundry  General  Expense 

Collection  and  Exchange 


following  trial 

12310.42 
967.85 
735.65 
4682.53 
1825. 
3374.25 
185. 
390. 


50. 
50. 


4167.55 

.  72. 
28.05 
2.70 


balance : 


$738.90 
1327.90 
5000. 

5000. 

6637.45 
53.75 
83. 


$18841.00       $18841.00 


SET  V.    JOKI5ING    FlTKMTl'KK   WSLNKHS  245 

'Inventories  : 

Merchandise  $4327.13 

Building  and  Fixtures  : 

Depreciation  33.74 

Office  Furniture  : 

Depreciation  3.70 

Delivery  Equipment : 

Depreciation  7.80 

2.  Note  the  distinctions  between  each  of  the  following: 

a.  Notes  Receivable  and  Accounts  I  Receivable. 

b.  Notes  Payable  and  Accounts  Payable. 

c.  Notes  Receivable  and  Notes  Payable. 

d.  Accounts  Receivable  and  Accounts  Payable. 

3.  Describe  briefly  the  method  used  to  lind  the  gross  profit  on  sales. 

4.  Explain   the   following   with  regard   to   the   tin  ml  >•  if    E.rpense   In- 
ventory account: 

a.  Under  what  conditions  is  this  account  opened  ? 
ft.  How  is  the  account  closed  ? 

5.  Journalize  orally  or  in  writing  each  transaction  in  the  month  of 
August.    The  amounts  may  be  omitted. 


CHAPTER  XX 

SET  V.   JOBBING  FURNITURE  BUSINESS  (CONTINUED) 
WORK  FOR  SEPTEMBER 

This  work  is  a  continuation  of  the  work  of  July  and  August. 
Incoming   Business  Forms  for  September.    Refer  to  the  instructions 
given  on  page  205.    The  following  list  continues  the  August  list: 

Form  44.  Sight  draft  of  S.  T.  Udell  &  Co.  on  your  firm  for  $479.50,  dated 
Chicago,  111.,  Aug.  31,  drawn  payable  to  W.  D.  Lapham. 

Form  45.  Invoice  of  Fowler  Furniture  Co.,  dated  Kochester,  Sept.  2.  Terms : 
cash,  less  2  °fc .  Items  as  follows  : 

10  #245  Cedar  Chests  10  #2229  Oak  Dining  Tables 

10  #687  Ornamental  Tables  15  #17  A  Roman  Chairs 

Do  not  deduct  the  discount  on  the  invoice,  but  record  it  in  the  cashbook. 

Form  46.  Invoice  of  C.  W.  Allen  &  Co.,  dated  Trenton,  N.<J.,  Sept.  2.  Terms : 
2/30,  net  60  da.  Items  as  follows  : 

50  #176  c  Piano  Chairs  20  #6387  Hall  Settles 

25  #835  Music  Cabinets  50  #170  English  Clothes  Poles 

Form  47.  Check  of  Walker,  Brown  &  Co.,  dated  Albany,  Sept.  6,  drawn  on 
Traders  National  Bank,  in  favor  of  your  firm,  for  $712.95. 

Form  48.  Check  of  H.  B.  Claflin  &  Co.,  dated  City,  Sept.  12,  drawn  on 
Traders  National  Bank,  in  favor  of  your  firm,  for  $400. 

Form  49.  Invoice  of  Cobb,  Bates  &  Co.,  dated  City,  Sept.  12.  Terms  :  3/10, 
net  30  da.  Items  as  follows : 

25  #16  L.  Dressing  Cabinets  25  #36  B  Gentleman's  Chiffoniers 

25  #5932  Empire  Toilet  Tables 

Form  50.  New  York  draft,  dated  Springfield,  Sept.  15,  drawn  by  The  Union 
Bank  of  Springfield  on  Chemical  National  Bank,  New  York, 
hi  favor  of  G.  H.  Ingalls  &  Co.,  for  $732.35,  A.  K.  Sheffield, 
Cashier.  Transferred  to  your  firm  by  full  indorsement. 

Form  51.  Check  of  Samuel  W.  Bradley,  dated  Bedford,  Sept.  20,  drawn  on 
Traders  National  Bank,  in  favor  of  your  firm,  for  $1587.60. 

Form  52.  Note  of  Chas.  B.  Sherman,  dated  Rochester,  Sept.  20,  at  30  da., 
with  interest  at  6%,  in  favor  of  your  firm,  for  $352.69. 

Form  53.    Draft  of  Traders  National  Bank,  dated  Bangor,  Sept.  20,  drawn  on 
Chemical  National  Bank,  New  York,  in  favor  of  your  firm,  for 
$454.06,  W.  H.  Gould,  Cashier. 
246 


SET  V.    JOBBING  FURNITURE  BUSINESS  247 

Form  54.  Invoice  of  William  Leavens  &  Co.,  dated  New  York,  Sept.  20. 
Terms  :  sight  draft  in  10  da.,  for  the  amount  of  the  bill,  less 
2^,.  Items  as  follows  : 

25  #5926  Secretary  Book  Cabinets  40  #08  Oak  Bookcases 

50  #396  Mahogany  Hall  Stands 

Form  55.  Bill  of  the  Metropolitan  Carting  Co.,  dated  City,  Sept.  30.  Items 
as  follows  : 

Sept.    2,  Freight  and  Cartage,  $0.75 
14,  Freight  and  Cartage,  $23. 
20,  Cartage,  $3. 

24,  Freight  arid  Cartage,  $17.40 
30,  Freight  and  Cartage,  $55.80 

Receipt  the  bill. 

Form  56.  Receipted  bill  of  the  Consolidated  Gas  and  Electric  Light  Co.,  dated 
City,  Sept.  30.  Terms  :  cash,  less  5  <"/, .  Items  as  follows  : 

Meter  at  current  date,  20,600  cu.  ft. 

Meter  at  last  settlement,  14,300  cu.  ft. 

Gas  consumed,  6300  cu.  ft.  at  $1.20  per  1000 

Opening  the  Work  for  September.  The  following  are  the  memoranda 
of  transactions  for  the  work  of  the  student  during  the  month  of 
September  : 

MEMORANDA  OF  TRANSACTIONS  FOR  SEPTEMBER 

September  2 

Pay  by  check  S.  T.  Udell  &  Co.'s  sight  draft  on  your  firm,  in  favor 
of  W.  D.  Lapham,  $479.50,  Form  44. 

Give  J.  O.  Moran  your  note,  at  60  da.  from  date,  for  $1900,  on 
account. 

Your  bank  informs  you  that  the  note  of  M.  N.  Overman,  due  Sept.  1, 
has  been  collected. 

The  Union  Bank  has  collected  the  sight  draft  on  Chas.  B.  Sherman, 
dated  Sept.  1.  Collection  on  the  draft,  50<£. 

This  draft  is  for  the  invoice  of  Aug.  2. 

September  3 

Walker,  Brown  &  Co.,  Albany,  send  in  the  following  order.  Fill  the 
order  at  the  prices  given  herewith: 

5  #89  M.  Chamber  Sets  at  $80         5  pr.  B.  Chenille  Curtains  at  $5 
15  pr.  #91  Lace  Curtains  at  $6  2  #16  A  C.  Dining-room  Sets  at  $110 

Terms :  3/5,  net  30  da. 


248  '          PRINCIPLES  OF  BOOKKEEPING 

J.  B.  Cox  &  Co.,  Somerville,  order: 

7  #572  Drawing-room  Suites  3  #59  A  Cheval  Glasses 

5  #3016  Fancy  Rockers  12  #2546  Ant.  Library  Rockers 

Fill  the  order.    Terms:   20-day  draft  for  the  amount  of  the  bill. 
Treat  in  the  same  way  as  the  order  of  July  8. 

/September  4 

Pay  Chas.  O.  Rigdon,  by  check,  $61.70  for  delivery  equipment  repairs. 
Debit  Delivery  Expense. 

The  Metropolitan  Carting  Co.  has  delivered  to  your  firm  the  goods 
ordered  of  the  Fowler  Furniture  Co.  on  Aug.  30,  Form  45. 

September  o 

Your  note,  in  favor  of  Stoddard  &  Co.,  and  your  acceptance,  in  favor 
of  the  Derby  Manufacturing  Co.,  are  due  to-day. 

Write  a  check  for  the  payment  of  each,  hand  them  in,  and  receive  the  canceled 
note  and  acceptance. 

Your  bank  informs  you  that  the  draft  on  Henry  L.  Miller  has  been 
collected.  Collection,  $2. 

Leave  at  the  bank  for  collection  the  sight  draft  drawn  on  Benj.  P. 
Freeman  &  Co.  on  Aug.  26,  for  the  invoice  of  that  date. 

September  6 

The  Metropolitan  Carting  Co.  has  this  day  delivered  to  you  the 
goods  ordered  of  C.  W.  Allen  &  Co.  on  Aug.  29,  Form  46. 

E.  F.  Green  &  Co.,  Bangor,  order  the  following.  Fill  the  order  at 
the  prices  given  herewith: 

15  #176  c  Piano  Chairs  at  $17  5  #835  Music  Cabinets  at  $5 

15  #170  E.  Clothes  Poles  at  $5.60      5  #6387  HaU  Settles  at  $23.25" 

Rumors  are  current  to  the  effect  that  the  resources  of  E.  F.  Green  &  Co.  are  in 
an  unsatisfactory  condition,  and  you  think  it  advisable  not  to  sell  them  anything 
on  account.  Prepare  the  usual  bill  of  lading.  Make  a  sight  draft  on  E.  F.  Green  & 
Co.,  in  favor  of  your  firm,  for  the  amount  of  the  invoice,  less  5%,  and  attach  it  to 
the  bill  of  lading.  Do  not  deduct  the  discount  on  the  invoice  nor  in  the  sales 
book.  (Refer  to  the  comment  on  the  shipment  to  P.  R.  Brown,  July  26.} 

Indorse  the  draft  to  the  bank  to  which  it  is  to  be  sent.  Write  a  letter,  inclose 
the  draft  and  the  bill  of  lading,  and  send  it  direct  to  Traders  National  Bank, 
Bangor,  for  collection. 

E.  F.  Green  &  Co.  have  consented  to  the  terms  of  this  shipment. 


SET  V.    JOBBING  FURNITURE  BUSINESS  249 

September  7 
Your  offer  to  prepay  your  note  in  favor  of  J.  ().  Moral  i  is  accepted. 

Refer  to  the  notebook  for  all  details  regard iu^  this  note.  Deduct  the  discount 
for  the  time  the  note  has  yet  to  run,  and  write  a  check  for  the  proceeds.  Have  the 
note  canceled,  and  keep  it  as  a  receipt. 

The  Union  Bank  lias  collected  the  sight  draft  on  Benj.  P.  Freeman 
&  Co.,  which  was  drawn  on  Any.  26  and  left  at  the  bank  for  collection 
on  Sept.  5. 

The  Union  Bank  reports  that  J.  B.  Cox  &  Co.  have  accepted  your 
draft  on  them  for  the  invoice  of  Sept.  o. 

Receive  of  Walker,  Brown  &  Co.  their  check,  for  the  invoice  of 
Sept.  3,  less  3%,  Form  47. 

September  10 

Samuel  W.  Bradley,  Bedford,  sends  in  the  following  order.  Fill  the 
order  at  the  prices  given  herewith : 

5  #36  B  G.  Chiffoniers  at  $10  10  #27r  \V.-wire  Mattresses  at  $3.25 

150  #16  K  L.  Dining  Chairs  at  $9.50       50  #15  0. 1  Hiring  Chairs  at  $2.25 

Terms:  3/5,  2/10,  net  30  da. 

G.  lL  Ingalls  &  Co.,  Springfield,  send  in  the  following  order.  Fill 
the  order  at  the  prices  given  herewith  : 

5  #2546  A.  Library  Rockers  at  $12         5  #035  Brass  Bedsteads  at  $22.50 
5  #626  M.  Office  Chairs  at  $16.50         5  #572  1).  Suites  at  $100 

Terms:  3/5,  2/10,  net  30  da. 

September  12 

Receive  from  H.  B.  Claflin  &  Co.  their  check,  for  their  acceptance 
due  to-day,  Form  48. 

Make  the  following  record  in  red  ink  across   the  face  of  the  draft,  and  then 

hand  ii;  in  :  Paid  in  full  9/12 

Student  &  Co. 

Give  Cobb,  Bates  &  Co.  the  following  order  over  the  telephone  : 

25  #36  B  Gentleman's  Chiffoniers         25  #5932  Empire  Toilet  Tables 
25  #16  Lady's  Dressing  Cabinets 

September  14 
Write  a  letter  to  William  Leavens  &  Co.,  New  York  City,  ordering: 

50  #396  Mahogany  Hall  Stands  40  #68  Oak  Bookcases 

25  #5926  Secretary  Book  Cabinets 


250  PRINCIPLES  OF  BOOKKEEPING 

The  Metropolitan  Carting  Co.  has  delivered  the  goods  ordered  of 

Cebb,  Bates  &  Co.  on  Sept.  12,  Form  49. 
M.  N.  Overman,  Albany,  orders : 

10  #50  Mahogany  Parlor  Tables  10  #10  China  Closets 

Fill  the  order.    Terms:  3/10,  net  60  da. 

September  16 

Chas.  B.  Sherman,  Rochester,  sends  the  following  order.  Fill  the 
order  at  the  prices  given  herewith: 

5  #5932  E.  Toilet  Tables  at  $50          5  #50  M.  Parlor  Tables  at  $21.25 

Terms:   30-day  note  with  interest,  less  1%. 

The  note  will  be  received  later ;  make  110  entry  until  it  is  received. 

Receive  of  G.  H.  Ingalls  &  Co.  a  New  York  draft,  in  payment  of 
the  invoice  of  Sept.  10,  less  3%,  Form  50. 

Deposit  the  checks,  the  New  York  draft,  and  all  currency  on  hand. 

September  18 

Remit  to  C.  W.  Allen  &  Co.  a  check  for  the  invoice  of  Sept.  2,  less  2%. 
Draw  a  sight  draft  on  Foley  Bros,  in  favor  of  Stoddard  &  Co..  for 
$2250,  and  remit  it  to  them,  to  apply  on  account. 

September  20 

Give  Cobb,  Bates  &  Co.  a  check  for  the  invoice  of  Sept.  12,  less  3%. 
You  and  your  partner  each  draw  from  the  business,  by  check,  $50. 
Hand  in  Manning's  check.    Have  your  check  cashed  at  the  bank. 

September  23 

Receive  of  Samuel  W.  Bradley  his  check,  on  the  Traders  National 
Bank,  in  payment  for  the  invoice  of  Sept.  10,  less  2%,  Form  51. 

September  24 

Receive  of  Chas.  B.  Sherman  his  note,  dated  Sept.  20,  in  favor  of 
your  firm,  for  the  net  amount  of  the  invoice  of  Sept.  16,  Form  52. 

September  25 

Receive  a  New  York  draft  from  the  Traders  National  Bank,  Bangor, 
for  the  amount  of  the  sight  draft  on  E.  F.  Green  &  Co.,  Sept.  6,  less 
75$  collection,  Form  53. 

The  account  should  be  credited  in  the  cashbook  for  the  amount  in  the  sales  book. 


SET  V.    JOBBING-  FUltNITUUE  BUSINESS  251 

The  amount  of  the  draft  is  the  face  of  the,  invoice  less  7.~><f.  K.  F.  Green  &  Co. 
deducted  the  collection,  and  this  necessitates  a  charg-e  on  your  books  for  the  75^,  as 
it  was  paid  by  you. 

September  2(i 

Deposit  the  check  which  was  received  of  Samuel  \V.  Bradley  on 
Sept.  23,  and  the  New  York  draft  on  hand.  The  collection  on 
Bradley's  check  is  $1.50. 

Your  bank  informs  yon  that  the  acceptance  of  J.  B.  Cox  &  Co., 
Sept.  3,  has-  been  paid.  Collection  charges,  $  1. 

/September  27 

The  Metropolitan  Carting  Co.  has  delivered  the  goods  ordered  of 
William  Leavens  &  Co.  on  Sept.  14,  Form  54. 

September  28 

Discount  at  The  Union  Bank  the  note  received  of  Chas.  B.  Sherman 
on  Sept.  24. 

The  bank  gives  you  credit  for  the  face  of  the  note. 

NOTE.  It  is  customary  for  some  banks  to  give  depositors  credit  for  the  face  of 
interest-bearing  notes  if  they  are  discounted  within  a  few  days  after  they  are  made. 
The  interest  is  the  compensation  received  by  the  bank. 

Give  J.  L.  Bidwell  &  Son  a  check  for  $125  for  1  carriage  horse. 
Debit  this  to  the  Drawing  account  of  Harvey  L.  Manning. 

September  30 

Pay  by  check  the  bill  of  the  Metropolitan  Carting  Co.  for  freight 
and  drayage  to  date,  $108.95,  Form  55. 

Debit  Merchandise  Purchases,  $78.45,  and  Freight  and  Cartage  Out,  $o().f>0. 

Pay  by  check  the  gas  bill  for  the  month,  $7.18,  Form  50. 
Give  each  partner  a  check  for  his  .monthly  salary,  '$100. 
Pay  by  checks  salaries  to  date  as  follows : 

Harry  K.  Sutton         $60  Michael  Donovan         $30 

Harvey  L.  Grant  50  Daniel  L.  Coon  48 

Geo.  W.  Ainsley         $40 

Closing  the  Set.  The  student  should  now  close  the  work  for  this 
month  as  follows: 

1.  An  inventory  of  everything  on  hand  has  been  completed  by 
Mr.  Sutton.  A  statement  of  it  follows : 

Make  the  extensions,  at  cost  prices,  on  a  sheet  of  journal  paper,  and  file  for  future 
'  reference. 


252  PRINCIPLES  OF  BOOKKEEPING 

Inventories,  September  30,  19 — 
Merchandise : 

5  #3116  Antique  Card  Tables  12  #626  M.  Office  Chairs 

14  #693  Antique  Wardrobes  4  #50  M.  Parlor  Tables 

10  #16  B  Brass  Easels  54  #396  M.  Hall  Stands 

20  #635  Brass  Bedsteads  17  #89  M.  Chamber  Sets 

13  pr.  Blue  Chenille  Curtains  20  #835  Music  Cabinets 

10  #245  Cedar  Chests  25  #  76  A  Oak  Chamber  Sets 

50  #15  Cane-seat  Dining  Chairs  10  #687  Ornamental  Tables 

2  #59  A  Cheval  Glasses  17  #2229  Oak  Dining  Tables 

10  #71  A  Child's  Cribs  12  #73  Oak  Writing  Desks 

7  #20  Corner  Chairs  43  #68  Oak  Bookcases 

25  #16  A  C.  Dining-room  Sets  5  #20  D  Parlor  Cabinets 

5  #572  Drawing-room  Suites  35  #176  c  Piano  Chairs 

25  #5932  Empire  Toilet  Tables  10  #57  Reclining  Couches 

35  #170  English  Clothes  Poles  15  #17  A  Koman  Chairs 

7  #3016  Fancy  Rockers  9  #73  Sofa  Beds 

32  #36  B  G.  Chiffoniers  28  #5926  Sec.  Book  Cabinets 

25  #6387  Hall  Settles  10  #65  Turkish  Rockers 

50  #16  K  L.  Dining  Chairs  14  #27  c  W.-wire  Mattresses 

5  #169  c  Library  Tables  4  #16  Wool  Mattresses 

13  pr.  #91  Lace  Curtains  2  #495  White  Iron  Bedsteads 
30  #16  Lady's  Dressing  Cabinets 

Office  Furniture :  . 

Depreciation  $5.15 

Delivery  Equipment : 

Depreciation  6.75 

Building  Fixtures : 

Depreciation  12.50 

Insurance  for  1  mo.  12.50 

2.  Make  the  statements  and  have  them  approved. 

3.  If  the  statements  are  correct,  close  the  ledger. 

4.  Rule  all  the.  personal  accounts  that  balance. 

5.  Hand  in  all  books  to  the  instructor  for  approval. 

DISSOLUTION  OF  PARTNERSHIP 

Consequences  of  Dissolution  of  Partnership.  The  direct  consequence 
of  a  dissolution  of  partnership  is  the  necessity  of  taking  effectual  steps 
to  close  the  partnership  affairs.  Some  disposition  must  always  be  made 
of  the  partnership  effects.  Sometimes  articles  of  copartnership  provide 
that  property  on  hand  shall  be  taken  at  dissolution  by  one  of  the 


SET  V.    JOBBING  FUEXITURE  BUSINESS  253 

partners  according  to  a  prescribed  mode,  and  in  that  case  the  business 
may  be  continued  without  interruption. 

In  the  following  case  (Set  Y)  there  was  no  such  agreement,  hut  the  partners 
between  themselves  entered  into  an  arrangement  whereby  Planning  continues  the 
business  and  Student,  for  a  sufficient  consideration,  consents  to  withdraw. 

Notice  of  Dissolution.  A  dissolution  of  partnership,  so  far  as  it  con- 
cerns its  own  members,  may  be  immediate,  but  with  reference  to  the 
public  the  element  of  notice  requires  consideration. 

A  -notice  of  dissolution  is  unnecessary : 

1.  When  a  partnership  expires  by  its  own  limitation. 

2.  When  a  partnership  is  dissolved  by  the  operation  of  law. 

3.  When  dissolution  occurs  by  the  death  of  one  of  the  partners. 

4.  When  a  dormant,  or  silent,  partner  retires. 

A  notice  of  dissolution  should  be  published  in  one  of  the  usual 
advertising  newspapers  of  the  city  in  which  the  business  has  been 
conducted.  This  notice  is  deemed  sufficient  for  all  those  who  have 
not  had  previous  dealings  with  the  firm. 

A  special  notice  of  the  dissolution  should  be  sent  to  those  who  have 
had  previous  dealings  with  the  firm. 

Dissolving  the  Partnership,  Set  V.  It  has  been  decided  to  dissolve 
the  partnership  existing  between  yourself  and  Harvey  L.  Manning.  You 
dispose  of  your  interest  to  Manning  for  the  following : 

1.  A  note  at  60  da.,,  with  interest  at  6%,  |7500. 

2.  A  check  for  the  balance   of   your   present  worth  as   shown   by   your 
ledger  account  after  closing,  Sept.  30. 

Write  the  note  and  have  the  instructor  sign  for  Manning. 

Make  the  journal  entry,  and  then  record  the  notes  in  the  notebook. 

Write  the  check  for  the  balance  of  your  present  -worth, 

Post  both  the  entries  to  your  account  in  the  ledger  and  close  the  account. 

Harvey  L.  Manning  is  to  conduct  the  furniture  business  at  the  old 
stand  under  the  name  of  Harvey  L.  Manning.  He  is  to  have  the 
assets  and  assume  all  the  liabilities  of  the  old  firm. 

Draw  a  check  in  favor  of  Harvey  L.  Manning  for  the  balance  of  the 
cash  in  the  bank  in  the  name  of  the  old  firm,  and  hand  it  in. 

It  is  assumed  that  your  attorney,  Fred  V.  Smith,  has  drawn  up  the  contract  of 
sale  and  the  warranty  deed  necessary  to  transfer  the  title  to  all  the  chattels  and 
the  real  estate  to  Manning.  These  documents,  it  is  assumed,  are  on  file  with  other 
important  papers. 

Prepare  a  notice  of  your  withdrawal  from  the  firm. 


254  PRINCIPLES  OF  BOOKKEEPING 

A  notice  of  dissolution  should  be  inserted  in  a  local  paper,  and  a  circular  mailed 
to  each  firm  with  whom  you  have  had  dealings. 

The  writing  of  these  notices  is  optional  with  the  instructor. 

After  giving  these  notices  your  liability  regarding  new  debts  ceases. 

DIVISION  OF  ACCOUNTS 

Real  accounts  are  divided  into  three  general  divisions,  —  assets,  liabili- 
ties, and  proprietary  interest  accounts. 

Assets.  Assets  are  property  of  value  belonging  to  the  business,  or 
amounts  due  the  business.  In  this  set  the  asset  accounts  are : 

Cash  Real  Estate 

Notes  Receivable  Building  Fixtures 

Accounts  Receivable  Office  Furniture 

Merchandise  Inventory  Delivery  Equipment 

Liabilities.  Liabilities  are  amounts  owed  by  the  business.  In  this 
set  the  liability  accounts  are : 

Notes  Payable  Accounts  Payable 

Proprietary  Interest  Accounts.  These  accounts  show  the  value  of 
ownership  or  the  net  worth  of  the  business.  In  a  business  which  is 
conducted  by  a  single  proprietor  or  by  partners,  proprietary  interest 
accounts  are  represented  by  the  individual  investment  account  with 
the  Proprietor  and  with  each  of  the  partners.  The  drawing  accounts 
and  the  Profit  and  Loss  account  are  grouped  under  this  division  of 
accounts.  In  this  set  the  proprietary  interest  accounts  are: 

Student,  Investment  Harvey  L.  Manning,  Drawing 

Student,  Drawing  Profit  and  Loss 

Harvey  L.  Manning,  Investment 

Nominal  accounts  are  divided  into  two  general  divisions,  —  income 
accounts  and  expense  accounts. 

Income  Accounts.  Income  accounts  record  the  income  received  by 
the  business.  In  this  set  the  income  accounts  are : 

Merchandise  Sales  Interest  Earned 

Merchandise  Discount  on  Purchases 

Expense  Accounts.  Expense  accounts  record  the  amounts  spent  with 
the  object  of  earning  a  profit.  In  this  set  the  expense  accounts  are : 

Merchandise  Purchases  *         Office  Supplies 

Salaries  Sundry  General  Expense 

Freight  and  Cartage  Out  Interest  Paid 

Delivery  Expense  Merchandise  Discount  on  Sales 

Insurance  Collection  and  Exchange 


SET  V.    JOBBING  FURNITURE  BUSINESS  255 

Exercise  60.    Review 

For  Oral  and   Written    Work 

1.  Name  all  the  accounts  receivable  in  the  ledger  for  Set  \ . 

2.  Name  all  the  accounts  payable  in  the  ledger  for  Set  V. 

3.  In  the  following  trial  balance,    name   the   income   accounts  ;    the 
expense  accounts. 

4.  Make  the  statements  from  the  following  trial  balance : 

Cash  $2(551.40 

Notes  Receivable  320.35 

Accounts  Receivable  785.55 

"Mdse.  Inventory  3402.20 

Real  Estate  2500. 

Building  and  Fixtures  3200. 

Office  Furniture  135. 

Delivery  Equipment  500. 

Notes  Payable  $305.40 

Accounts  Payable  800. 

Martin  S.  Lake,  Investment  5500. 

Martin  S.  Lake,  Drawing  140. 

Henry  A.  Sampson,  Investment  5500. 

Henry  A.  Sampson,  Drawing  100. 

Mdse.  Sales  4828.35 

Interest  Earned  70.95 

Mdse.  Discount  on  Purchases  134.70 

Mdse.  Purchases  3072.50 

Salaries  156.65 

Sundry  General  Expense  10. 

Mdse.  Discount  on  Sales  74.25 

Interest  Paid  37.50 

$17145.40          $17145.40 
Inventories  : 

Merchandise  $3113.55 

Building  and  Fixtures  : 

Depreciation  32. 

Office  Furniture : 

Depreciation  2.70 

Delivery  Equipment : 

Depreciation  .  5. 

5.  Journalize   orally   or    in   writing    each    transaction    of    Set    V    in 
September. 

The  amounts  may  be  omitted. 


256  PRINCIPLES  OF  BOOKKEEPING 

Exercise  61.    Partnership  Arrangements 

For  Written  Work 
Make  entries  for  the  folloiving  partnership  arrangements : 

1.  Henry  T.  Jackson  and  James  Young  form  a  partnership  as  follows: 

Henry  T.  Jackson  invests  cash,  $1500,  and  a  stock  of  merchandise  valued 
at  $2750. 

Janies  Young  invests  cash,  $1250,  and  a  lot  worth  §3000. 

2.  Student  and  Fred  S.  Carmen  form  a  partnership  as  follows: 

Student  invests  cash,  $2000,  and  R.  S.  Good's  note  which  he  holds ;  face 
of  the  note,  $500. 

Fred  S.  Carmen  invests  cash  equal  to  the  total  investment  of  Student. 

3.  Harold  D.  Powers  owns  a  dry-goods  business  the  present  value 
of   which   is    $16,450.    He   sells   a   half  interest  to  Bernard  F.  Shaw 
for  $8225. 

4.  George  D.  Fuller  owns  a  drug  store,  and  he   values   the   store, 
fixtures,  and  stock   at   $12,600.     Ralph  F.  Yarley  becomes  an   equal 
partner  with  Fuller  by  investing  cash,   $7600,  and  a  stock  of  drugs 
worth  $5000. 

5.  Henry  S.  Carey,  George  R.  Downey,  and  Harry  S.  Mason  form 
a  partnership  on  the  following  conditions :  the  capital  is  to  be  $25,000, 
of  which  Carey  invests   $12,500,  Downey  invests  $7500,  and  Mason 
borrows  $5000  of  Carey  and  invests  it  in  the  business. 

QUERY.    How  much  of  the  Mason  investment  and  loan  should  be  entered  on  the 
books  of  the  business  ? 

NOTE.   The  Formation  of  Partnerships  is  illustrated  and  discussed  in  Appendix  G. 


APPENDIX   A 

DEFINITIONS   AND   RULES 

DEFINITIONS  AND  EXPLANATIONS 


Bookkeeping.  Bookkeeping  is  the  art  of  making  a  systematic  record  of 
business  transactions.  From  the  record  the  Proprietor  may  ascertain  the 
condition  of ~~kis  business. 

Business  Transaction.    A  business  transaction  is  an  exchange  of  values. 

Double  Entry  and  Single  Entry.    There  are  two  methods  of  bookkeeping, 
{double  entry  and  single  entry. 

In  double  entry,  accounts  are  kept  not  only  with  persons  but  with  all  sources 
\that  affect  the  results  or  the  condition  of  the  business. 

In  single  entry,  accounts  are  kept,  usually,  with  persons  only. 

iventory.  An  inventory  is  an  itemized  statement  or  schedule,  in  writ- 
ing, showing  the  amount  of  certain  assets  owned  by  the  business,  or  certain 
liabilities  owed  by  the  business. 

•  Capital.    Capital,  at  the  beginning  of  the  business,  usually  is  the  amount 
invested ;  at  other  times  it  is  the  excess  of  assets  over  liabilities. 

Merchandise.     Merchandise  includes  all  commodities  which  are  held  for 
purposes  of  exchange. 
SExpense.    Expense  is  any  cost  necessary  to  carry  on  the  business. 

Interest.  Interest  is  the  compensation  allowed  by  law  or  fixed  by  the  parties 
for  the  use  or  forbearance  or  detention  of  money.  —  HUFFCUT. 

Notes  Receivable.  Notes  receivable  are  the  written  promises  of  others  to 
pay  us. 

Notes  Payable.    Notes  payable  are  our  written  promises  to  pay  others. 

Posting.  Posting  is  a  process  of  transferring  debit  and  credit  items  to 
their  respective  accounts  in  the  ledger. 

Present  Worth.    The  present  worth  of  the  Proprietor's  account  is, 

Net  credit  plus  net  profit,  or 

Net  credit  minus  net  loss,  or 

The  excess  of  assets  over  liabilities. 

Receipt.  A  receipt  is  a  written  acknowledgment  of  money  or  other  value 
received. 

Voucher.    A  voucher  is  a  written  statement  proving  that  some  transaction 
has  occurred. 
-"Solvency.    When  assets  exceed  liabilities  a  business  is  solvent. 

Insolvency.    When  liabilities  exceed  assets  a  business  is  insolvent. 


11 


APPENDIX  A 


Journal.  The  journal  is  a  book  in  which  the  debits  and  the  credits  of 
business  transactions  are  arranged  systematically ;  the  history  of  each  trans- 
action and  the  amount  are  included. 

Ledger.  The  ledger  is  a  book  containing  the  accounts  of  the  business,  the 
debits  and  the  credits  having  been  collected  from  other  books  of  entry. 

Book  of  Original  Entry.  A  book  of  original  entry  is  a  book  in  which  entries 
are  first  made. 

Book  of  Final  Entry.  A  book  of  final  entry  is  a  book  to  which  the  debits 
and  the  credits  of  accounts  are  posted. 

Notebook.  A  notebook  contains  an  itemized  record  of  all  notes  received  or 
issued  by  the  business. 

Charge.    The  term  charge,  as  used  in  bookkeeping,  means  debit. 

Invoice.  An  invoice  is  an  itemized  statement  of  goods  bought  or  sold.  It 
includes  the  names,  the  quantities,  the  prices,  and  the  amounts. 


RULES  FOR  JOURNALIZING 

General  Rule.  Debit  the  account  that  stands  for  a  value  received,  or  for  a 
person  or  a  thing  that  causes  value  to  go  out. 

Credit  the  account  that  stands  for  a  value  given,  or  for  a  person  or  a  thing 
that  brings  in  value. 

The  following  is  a  general  summary  for  the  use  of  debit  and  credit : 

DEBIT  CREDIT 


1.  Merchandise   and  other  property 
which  is  bought 

3.  That  which  costs  value 

5.  All  moneys  received 

7.  Persons   when    they   become   in- 
debted to  the  business 

9.  Persons  when  the  business  gets 

out  of  their  debt 
11.  Other  persons'  notes  received  by 

the  business 

13.  Notes  redeemed  or  paid  by  the 
business 


2.  Merchandise  and  other  property 

which  is  sold 

4.  That  which  produces  value 
6.  All  moneys  paid  out 
8.  Persons  when  the  business  becomes 

indebted  to  them 
10.  Persons  when  they  get  out  of  debt 

to  the  business 
12.  Notes    given    or    issued    by    the 

business 

14.  Other  persons'  notes  when  paid  by 
them  to  the  business 


APPENDIX   B 


COMMERCIAL   TERMS   DEFINED 


Acceptance.  The  name  of  an  accepted 
draft;  an  agreement,  by  signature, 
to  the  terms  named  in  the  draft. 

Account  Current.  An  open  or  a  running 
account ;  a  detailed  statement  of 
transactions  between  two  persons 
or  two  firms. 

Account  Sales.  An  itemized  statement 
of  sales  and  expenses,  rendered  by 
a  commission  merchant  to  his  prin- 
cipal. 

Acknowledgment.  A  formal  admission, 
made  before  a  notary  or  other  quali- 
fied officer,  that  the  act  described 
was  done  voluntarily ;  the  officer's 
certificate  of  such  admission. 

Affidavit.  A  written  statement  made 
under  oath. 

Agent.  One  who  acts  for,  or  in  place  of, 
another,  by  authority  from  him ;  a 
deputy. 

Assignee.  One  appointed  by  another  to 
do  some  act  or  to  enjoy  some  right ; 
generally,  one  to  whom  property  is 
transferred  for  the  benefit  of  the 
creditors. 

Attachment.  A  seizure  or  taking  into 
custody  by  virtue  of  a  legal  process. 

Auditor.  A  person  appointed  to  examine 
accounts. 

Bankrupt.  Any  person  whose  property 
becomes  liable  to  administration 
under  the  bankruptcy  laws. 

Bill  of  Lading.  A  receipt  of  a  transpor- 
tation company,  containing  an  ac- 
count of  the  goods  shipped  and  the 
conditions  of  shipment. 

Bill  of  Sale.  A  writing  given  by  the  seller 
of  personal  property  to  the  buyer. 


Board  of  Trade.  In  the  United  States, 
a  voluntary  organization  of  business 
men  for  the  advancement  of  com- 
mercial interests. 

Bona  Fide.    In  good  faith. 

Bond.  A  written  promise  under  seal, 
binding  a  person  to  do  a  certain 
thing  or  not  to  do  it. 

Bonus.  Something  given  in  addition  to 
what  is  strictly  due  the  recipient. 

Broker.  An  agent  between  buyer  and 
seller ;  a  dealer  on  the  stock  ex- 
change. 

Capital.  The  investment  in  a  busi- 
ness. 

Cashier.  One  who  has  charge  of  money ; 
in  banks,  the  financial  officer. 

Certified  Check.  A  check  that  has  been 
accepted  by  the  bank  on  which  it  is 
drawn,  thereby  making  the  bank 
security  for  its  payment. 

Clearing  House.  An  institution  in  a  city 
where  daily  settlements  are  made 
between  banks  by  the  mutual  ex- 
change of  checks,  drafts,  etc.,  the 
difference  between  such  exchanges 
being  paid  in  cash. 

Collateral.  A  security  additional  to  the 
personal  obligation. 

Common  Carrier.  One  who  undertakes 
the  office  of  carrying  either  goods 
or  persons  for  hire. 

Copartnership.  The  voluntary  associa- 
tion or  joining  of  two  or  more  per- 
sons in  a  business  enterprise.  The 
same  as  partnership. 

Copyright.  A  right  of  control  granted 
by  a  government  to  an  author  or 
a  publisher. 


IV 


APPENDIX  B 


Coupon.  A  certificate  of  interest  due, 
printed  at  the  bottom  of  trans- 
ferable bonds,  designed  to  be  cut 
off  and  presented  for  payment  when 
the  interest  is  due. 

Credit  Memorandum.  A  notice  sent  to 
a  purchaser  stating  that  an  allow- 
ance has  been  made  for  goods  re- 
turned, or  for  other  causes. 

Deed.  A  contract  under  seal,  usually 
transferring  the  title  of  real  estate. 

Depreciation.   A  falling  of  value. 

Dishonor.  A  refusal  to  pay  an  obliga- 
tion when  due,  or  to  accept  a  draft 
when  presented  for  acceptance. 

Dividend.  The  allotment  to  each  stock- 
holder in  the  division  of  profits. 

Drayage.    Charges  for  conveying  goodsx 
from  one  place  to  another. 

Exchange.  The  method  by  which  debts 
are  discharged  without  the  actual 
transference  of  money;  the  rate  at 
which  such  exchange  can  be  made. 

Extension.  An  allowance  of  further 
time  for  the  payment  of  a  debt. 

Fixtures.  That  part  of  the  furnishings 
of  a  store  or  an  office  which  is  not 
movable. 

Footing.  The  adding  of  a  column  of  fig- 
ures, or  the  result  of  such  addition. 

Forgery.  The  writing  of  another's 
name,  as  a  signature,  with  fraudu- 
lent intent,  or  the  altering  of  a 
written  document. 

Franchise.  A  certain  right  or  privilege, 
granted  by  a  government  to  indi- 
viduals or  corporations. 

Freight.  Compensation  paid  for  the 
transport  of  goods  or  other  property; 
that  with  which  anything  is  laden 
for  transportation. 

Good  Will.  The  value,  in  a  business,  of 
established  reputation  or  patronage. 

Guaranty.    An  agreement  by  which  oneS. 

•»•        * 


Honor.  To  accept  a  draft,  or  to  pay  it 
when  due. 

Income.  The  total  amount  of  the  earn- 
ings and  the  receipts  of  money  from 
all  sources. 

Index.  An  alphabetical  table  of  contents. 

Indorse.  To  write  one's  name  on  the 
back  of  a  note,  a  check,  or  a  draft ;  to 
record  a  partial  payment  on  the  back 
of  a  note. 

Installment.  A  sum  of  money  paid  in 
stated  portions. 

Insurance.  Indemnity  against  loss ;  the 
premium  paid  for  insuring. 

Jobber.  A  merchant  who  buys  goods 
from  importers  and  manufacturers, 
and  sells  to  either  wholesale  or  retail 
merchants. 

Liquidation.  Act  or  process  of  settling 
debts. 

Lease.  A  contract,  usually  in  writing, 
for  the  temporary  possession  of  real 
estate  or  other  property. 

Letter  of  Credit.  A  letter  usually  issued 
by  a  bank,  addressed  to  banks  in 
foreign  cities,  directing  payment  of 
a  stated  amount  to  the  holder. 
Such  letters  are  usually  carried  by 
travelers. 

Manifest.    An  invoice  of  a  ship's  cargo. 

Mercantile  Agency.  An  institution  which 
obtains  and  furnishes  information 
regarding  mercantile  enterprises, 
their  financial  standing,  their  busi- 
ness reputation,  etc. 

Money.  Current  coin ;  any  circulating 
medium. 

Mortgage.  A  conditional  transfer  of  the 
title  to  real  estate  or  chattels  as  se- 
curity for  the  payment  of  a  debt. 

Negotiate.  To  treat  with  another  with 
a  view  to  reaching  an  agreement; 
to  transfer  for  a  valuable  considera- 
tion. 


person   promises  to  make  another  ^Net.    Clear  of  all  charges  or  deductions, 

secure  in  the  possession  or  enjov-  Notary.    A  public  officer  who  takes  ac- 

ment    of    something ;     a    security  knowledgments  of  legal  documents 

against  loss.  and  protests  paper  for  nonpayment. 


APPENDIX  B 


Open  Account.  A  running  or  an  unsettled 
account. 

Open  Policy.  An  insurance  policy  cover- 
ing undefined  risks  and  admitting 
of  subsequent  indorsements  or  ad- 
ditions. 

Outstanding  Accounts.  Book  accounts 
remaining  unpaid. 

Overdrawn.  A  term  applied  to  a  bank 
account  when  a  check  has  been 
issued  for  an  amount  greater  than 
one's  credit  balance. 

Patent.  An  exclusive  right  to  an  inven- 
tion, issued  by  a  government. 

Pawnbroker.  One  who  makes  a  business 
of  lending  money  on  personal  prop- 
erty pledged  and  in  his  keeping. 

Power  of  Attorney.  A  legal  authority  to 
act  for  another. 

Premium.  The  consideration  paid  for  a 
contract  of  insurance ;  a  sum  or 
bonus  in  addition  to  the  capital. 

Protest.  A  formal  notice,  issued  by  a 
notary  to  the  indorser  or  the  in- 
dorsers  'of  a  note  or  draft,  of  the 
nonpayment  of  a  note  or  a  draft,  or 
the  nonacceptance  of  a  draft. 

Quotations.  The  published  or  current 
prices  of  stocks,  bonds,  or  any  com- 
modity. 

Rebate.  An  allowance  for  overcharge,  for 
early  payment,  or  for  other  reasons. 

Receiver.  A  person  appointed  by  the 
court  to  hold  in  trust  property  which 


is  tho  subject  of  litigation,  pending 
the  suit ;  or  one  who  is  appointed 
to  wind  up  the  affairs  of  a  partner- 
ship or  a  corporation  oil  its  dissolu- 
tion. 

Retail.    To  sell  in  small  quantities. 

Short-extend.  To  enter  individual 
amounts  at  the  left  of  the  money 
column,  to  be  extended  in  total  in 
the  money  column. 

Sinking  Fund.  A  fund  set  apart  for  the 
redemption  of  bonds  or  for  other 
specific  uses. 

Sundries.  Many  different  or  small  things. 

Syndicate.  A  combination  of  capitalists 
who  unite  their  resources  to  advance 
some  specific  business  enterprise. 

Tariff.    A  lawful  rate  of  duty  on  imports. 

Terms.  Conditions  of  sale  or  of  agree- 
ment. 

Tickler.  A  book  containing  memoranda 
of  all  time  paper,  and  arranged  so 
as  to  serve  for  a  reminder  to  pay  or 
to  collect. 

Trustee.  One  intrusted  with  property  for 
another. 

Underwriter.    One  who  insures, 

Valid.    Binding  in  law. 

Void.    Not  binding  in  law. 

Way  Bill.  A  document  containing  a  de- 
scription and  shipping  directions  of 
goods  sent  by  railroad. 

Wholesale.  Selling  large  quantities,  usu- 
ally in  unbroken  packages. 


APPENDIX  C 


ABBREVIATIONS  AND  GENERAL  TERMS 


A America ;  American 

A  I First  class 

Acct.  or  acct.  .     .  Account 

Acct.  Cur.       .     .  Account  Current 

Acct.  Sales     .     .  Account  of  Sales 

Adv.  or  adv.  .     .  Advertisement 

Agt Agent 

A.M Before  noon  ;  Master 

of  Arts 

Amt Amount 

App Appendix 

Asst Assistant 

Atty Attorney 

Av.  or  Ave.    .     .  Avenue 

Bal Balance 

B.B BiU  Book 

bbl Barrel 

bdl Bundle 

Bk.  .     .     .     .     .  Bank 

B/L       ....  Bill  of  Lading 

Bld'g     ....  Building 

bu Bushel 

bx Box 

I Cent 

Cash Cashier 

Ck Check 

Co Company;  County 

C.O.D Collect  on  Delivery 

Coll Collection;  Collector 

Cr *  .  Credit ;  Creditor 

cwt Hundredweight 

da Day 

Dep't     ....  Department 

Dis Discount 

do The  same 

doz Dozen 

Dr.    .....  Debtor;  Doctor 

E.  &  O.E.       .     .  Errors  and  omissions 

excepted 


ea Each 

e.g For  example 

Esq Esquire 

etc.  or  &c.      .     .  And  so  forth 

Ex Example 

Exch Exchange 

fig Figure,  Figures 

F.O.B.  or  f  .o.b.    .  Free  on  board 

Fol Folio,  or  page 

ft Foot 

gal Gallon 

gr Grain 

gro Gross 

hhd Hogshead 

bund Hundred 

i.e That  is 

in Inch 

Ins Insurance 

inst Instant;   the  present 

month 

Int Interest 

Inv Invoice 

Jr Junior 

kg Keg 

Ib Pound 

L.B Letter  Book 

L.F Ledger  Folio 

Ltd Limited 

M Thousand 

Mdse Merchandise 

Mem Memorandum 

Messrs.      .     .     .  Gentlemen;  Sirs 

Mfg Manufacturing 

min Minute 

Mme Madam 

mo.   .     .     .     .     .  Month 

Mr Mister 

Mrs Mistress 

MS Manuscript 


APPENDIX    C 


vn 


MSS  

Manuscripts 

St.     .     . 

Street  ;  Saint 

N.A  

North  America 

Str.  .     . 

Steamer* 

N.B  

Take  notice 

Sunds.  . 

Sundries 

No.  or  no.      .    . 

Number 

Supt.     . 

Superintendent 

O.K  

All  correct 

Tr.    .     . 

Transpose 

Oz.  or  oz.        .     . 

Ounce 

Treas.    . 

Treasurer 

P  

Page 

ult.  .     . 

Ultimo  ;    of   the   last 

Payt.  or  payt.     . 

Payment 

month 

DC. 

Piece 

U.S.M. 

United  States  Mail 

Pd  

Paid 

via    .     - 

Bv  way  of 

per    

By 

viz.  . 

Namely  ;  to  wit 

Per  cent  or  per 

vol.  .     . 

Volume 

cent  .... 

By  the  hundredths 

vs.    .     . 

Against 

Dk. 

Peck 

W/B     . 

.     .     .     Way  Bill 

Pkg  

Package 

wk.  .     . 

.     .     .     Week 

P.M  

Postmaster  ;  After- 

wt.   .     . 

.     .     .     Weight 

noon 

Yd.  or  yd. 

.      .     Yard 

P.O  

Post  Office 

Yr.  or  yr. 

Year 

DD. 

Pages 

ARBITRARY  SIGNS 

Dr. 

Pair 

Pres  

President 

a/c    .     . 

Account 

prox  

Proximo  ;  of  the  next 

@      -     - 

At  or  to 

'   month 

c/o    .    . 

Care  of 

Dt. 

Pint 

£  .  .  . 

.      .      .      Cent 

P.S  

Postscript 

V     •    • 

Check  mark 

or. 

Quire  *  Quarter 

$.    .    . 

.     .     .     Dollar 

at. 

Quart 

#•    •    • 

Number,  if  written 

Rec'd    .... 

Received 

before     a    figure  ; 

Ret'd    .... 

Returned 

pounds,  if  written 

Rev  

Reverend 

after  a  figure 

R.R.          ... 

Railroad 

%•      :     • 

Per  cent 

Ry  

Railway 

I1        .      . 

One  and  one  fourth 

Sec  

Secretary 

I2 

One  and  two  fourths 

Shipt  

Shipment 

I3        .      . 

One  and  three  fourths 

sq.  ft  

Square  feet 

1    .      .      . 

Feet 

Sr. 

Senior 

"... 

Inches 

APPENDIX  D 


FORMS  AND  LEGAL  DOCUMENTS 


W.  O.  WEAVER 


C.  W.  FKEY 


Office  of 


W.  D.  RADCLIFFE 


W.  O.  Weaver  &  Co 


WHOLESALE  GROCERS 


FORM   I.     LETTER   OF   REMITTANCE 


viii 


APPENDIX  D  ix 


Of  COpattttCt$I)ip  made  awl  entered  into  this  first  day  of 
May,  one  thousand  nine  hundred  and  eighteen,  between  Malcolm  I).  Gilbert,  of  the 
City  of  Boston,  County  of  Suffolk,  and  Commonwealth  of  Massachusetts,  and  Chas. 
M.  Wentworth,  of  said  Boston  : 


jFtrfit.  This  copartnership  is  formed  for  the  purpose  of  carrying  on  in  said  City 
of  Boston  a  Jobbing  Furniture  business  under  the  firm,  name,  of  M.  1).  Gilbert  &  Co., 
and  shall  continue  for  two  years  from  the  date  hereof  unless  sooner  dissolved  by  mutual 
consent. 

§rroilt).  As  his  contribution  to  the  capital  of  the  firm  said  Malcolm  D.  Gilbert 
hereby  transfers  to  the  said  firm  his  business  now  located  at  No.  467  East  Street,  and 
said  firm  assumes  and  agrees  to  pay  the  outstanding  liabilities  of  the  said  business. 
Said  business  is  taken  over  at  the  net  value  of  $14.2,15.  and  is  more  particularly  de- 
scribed in  the  Schedule  of  Assets  and  Liabilities  hereto  annexed. 

2TI)trtI.  Said  Chas.  M.  Wentworth  contributes  as  his  share  of  the  capital  as 
follows:  cash,  $7000  ;  stock  of  furniture,  $1500  ;  account  u:ith  Foley  Bros.,  $5725  ; 
total,  $14,225. 

jFottttl).  Each  partner  shall,  semi-annualltj  ,  be  credited  on  the  books  of  the  firm 
with  interest  at  the  rate  of  6  per  cent  per  annum  on  his  share  of  the  capital  for  the  time 
being  standing  to  his  credit,  before  any  division  of  profits  is  made,  such  interest  charge 
to  be  treated  as  an  expense  of  the  business. 

jfiftl).  Each  partner  shall  be  credited  with  the  sum  of  $1W  per  month  as  salary, 
and  he  may  withdraw  the  same  monthly,  for  services  rendered,  or.  at  his  option,  any 
balance  remaining  undrawn  may  be  carried  to  such  partner's  capital  account.  Such 
salaries  shall  be  charged  as  an  expense  of  the  business  and  not  reckoned  as  profits. 


Profits  and  losses  shall  belong  to,  and  be  borne  by,  the  said  partners  in 
equal  shares. 


Neither  partner  shall,  for  the  benefit  of  any  third  person,  indorse  any 
notes  or  negotiable  paper,  or  become  surety  or  guarantor  or  otherwise  liable  for  the 
benefit  of  third  parties,  without  the  assent  in  writing  of  the  other  partner  first  obtained. 


An  account  of  the  stock  and  of  the  debts  and  liabilities  of  the  firm  shall 
be  taken  at  least  annually,  and  the  profits  or  losses  computed  and  credited  or  charged  to 
each  partner's  capital  account.  After  such  accounting,  either  party  shall  be  at  liberty 
to  withdraw  his  share  of  any  net  profits  of  the  firm,  and  any  profits  not  so  withdrawn 
shall  be  added  to  and  deemed  a  part  of  the  capital  account  of  such  copartner. 


Neither  partner  shall  engage  in-  any  other  business,  but  each  shall  devote 
his  entire  time  and  attention  to  and  put  forth  his  best  efforts  and  energy  for  the  further- 
ance of  the  business  aforesaid. 

QTttttl).  Complete  and  accurate  books  of  account  shall  be  kept,  used  in  common. 
and  each  partner  shall,  at  all  times,  have  access  thereto. 

To  the  faithful  performance  of  all  the  terms  and  conditions  of  these  Articles  of 
Copartnership,  the  undersigned  partners  hereby  bind  themselves  each  to  the  other,  his 
heirs,  executors,  administrators,  and  assigns. 


3Tn  5l8EitnC£!S  ©SRIjmof,  the  parties  have  hereto  affixed  their  hands  and  seals, 
in  duplicate,  the  day  and  year  first  above  written. 


.  [SEAL] 

[Signed] 

[SK.V.L] 


FORM    II.     ARTICLES    OF    COPARTNERSHIP 


APPEXDIX  D 


all  ;JHen  by  tfjese  presents 


that   w-£>,    Jo.    10*.    TWo^Mamr  amd,   /\o-6-£A.t   traJLLt 

fawn,  oj.  B.  10*.  Tncyucfam,  ty  Co-.,      of  the  City  of     Boston, 

have  -made,  constituted,  and  appointed,  and  by  these  Presents 

do  make,  constitute,  and  appoint,      (SAaAJL&a,  ?H.    Raymond, 

of  the  City  of    c/r&wton,  TWoM/.,  ou'i,    true  and  lawful  Attorney, 

for    u&     and  in      OUA,     name,  place,  and  stead     to 

and  to  c/c^z/  am^L  lwu;toi&&  cwvy  o^  ait  oi  tA& 


n,  the,  &OUA&&  oi  ov  i&O'UAsna  fiuwn>  ou,^  6~uo,im,&&&,  giving 
and  hereby  granting  unto  OUA,  said  Attorney  full  power  and 
authority  to  a4^n>  amd,  {/YU£OW,&  o/u&h,  {/nati/wwisE/yit&'/  am,cL  to 
fosAAowns  cuit  amd,  EA>-eAA4  a#t  wAat&o^v-EA,  cd>~out  tli&  fo\£/mAA/&£' 
as  freely,  fully,  and  effectually  as  w-&  could  do  if  personally 
present,  with  full  power  of  substitution  and  revocation,  hereby 
ratifying  and  confirming  all  that  OUA,  said  Attorney  or  his 
substitute  shall  lawfully  do  or  cause  to  be  done  by  virtue  hereof. 
3Tn  Witntes  H^Ijmof,  ^t£<  l^ave  hereunto  set  OUA,  hands  and 
seals  this  ILLt&emth,  cLuy  oi  QuLy  in  the  year  nineteen 
hundred  amd, 


Attorney's  Signature  Ro{>-£At    /"faLL  [SEAL] 


Commonwealth  of  Massachusetts )  . .  „  ,.  -    . 

}ss.         JaooLon,  fna&A,.,   jt-iuaj  fo,  Ivf— 
County  of  Suffolk 

Then  personally  appeared  the  above-named  B.  W-.  Tyioufam, 
amd,  Rofj-eAt  /tali  and  acknowledged  the  foregoing  instrument 
to  be  tkeAA,  free  act  and  deed. 

Before  me, 

€.    <&.    A/Tt^ 

JQotarp  public 

FORM    III.     POWER    OF    ATTORNEY 


APPENDIX  D  xi 


Commontoealti)  of 


County  of  Suffolk 
City  of  Boston 

On  the  t&nt/i-  day  of  Jb&e&VKbf'i  ,  in  the  year  of  our  Lord  one 
thousand  nine  hundred  amd,  £.icf/it&cii,  ^,  7  A.  (X.  /At'tuyu, 
jBotarj)  Public,  duly  admitted  and  sworn,  and  practicing  in  said 
Commonwealth,  at  the  request  of  Ju&iyh  /'f.  $iiAwn,t  (Esq., 
Caeljter  of  the  &owvYn&(&iaL  c/lrationa-L  $ank-f  went  with  the 
original  not&,  which  is  hereunto  annexed  ,  the  time  therein 
limited  having  fully  elapsed,  and  demanded  payment  thereof 
at  ttv&  €?c&E£&i<y^ 
S'anMyyia  cfetts/Lif  "cfto- 

The     not&     remaining  unpaid  ,  I  duly  and  officially  notified 
the  im^Lai^&^O'  tA&b&oi  at  t/ie> 


fo.  I/ft,  /i-oat&n/  If  &&.,  c 

(postage  prepaid}  of  said  cL&taatlt  requiring  payment. 
^Ijereforc,  I,  the  said  JQotarp,  by  request  as  aforesaid,  have  pro- 
tested and  by  these  presents  do  solemnly  protest,  against  the 
drawer  of  said  not&,  the  indorser,  and  all  others  concerned 
therein,  for  exchange,  re-exchange,  and  all  costs,  charges, 
damages,  and  interest,  suffered  and  sustained,  or  to  be 

suffered    and   sustained,  by  reason  or  in  conse- 

quence of  the  non-payment  thereof. 


I  have  hereunto  set  my  hand  and 
affixed  my  Notarial  Seal,  the  day  and  year  first  above  ivritteji. 


Noting  Non-Acceptance   .    .    . 
Postage    ......... 

Protesting  for  Non-Payment    .  $/.&(/ 

Postage    ........    .         .0?  M.    C(  , 


Botarp  public 


FORM    IV.     CERTIFICATE    OF    PROTEST 


xii  APPENDIX  D 


Commercial  Rational 

Boston,  Mass.,      £&&.  /O,      /<? — 


Dear  Sir  A,: 

You  are  hereby  notified  that  a 

drawn  by  jCz&keA,,  Buvb  fy*  (Ho-. ,    and  indorsed  by      ii&u,     dated 

c/e^£.  /Of      19 ,  payable     ttw&&  iwuynth&     after  date,  has  been 

protested  by  me  for  non-payment  after  due  demand  at  tA& 
€?c&&t&i<yi,  cAatLonott  $a/nfc  this  day,  and  that  you  are  held 
answerable  for  the  amount,  with  all  legal  costs,  interests,  and 
damages  in  consequence  of  the  non-payment  thereof. 

Respectfully  yours, 

J  -iotarp  jjubltc 

FORM   V.     NOTICE    OF    PROTEST 


APPENDIX  E 

THE  USE  OF  TELEGRAMS 

The  following  model  suggests  the  general  wording  and  the  form  of  a 
telegram  as  it  would  be  made  out  on  a  Western  Union  blank : 


foric  1307 

cuts  of  xmtct  DOMED 

WESTERN  UNION 

Fu-  D.T  M-u,,         X 

DttLrtKr 

M*  lUlu* 

T*PI  SSl^b  A  1WI                    °" 

•fUUOtr 

MMMM  me  inSwS 

WILL  K  TRANSMITTED  AS  « 
FAST  DAT  MESSAGE. 

Send  the  foUowraf  lele(ria),  lubjecl  to  lh«  urmi                                               _                                                             _-.--. 
OD  b.ck  hereof,  wkich  ire  bertbr  «jre«d  lo                                                         bOStOn,      MaSS  .    ,      JUly     11,               19,_ 

To        W.  M. 

Brown  &  Co. 

146  Fifth  Avenue,   New  York,  N.Y. 

Ship  fast 

freight  twenty  number  sixty  library  tables 

Manning  &  Ball 

'WMBeirs  ADDRESS 

FOR    AHSWCR 

srnoctr-s  TELE.         Ua  -i  n    O^V 

PHONE  NUMBER             Md-lll      <CO  1 

In  writing  telegrams,  observe  the  following  : 

1.  Omit  the  salutation,  the  complimentary  close,  and  all  superfluous  words. 
Avoid  such  expressions  as  Ship  immediately  by  American  Express,  etc.    Here, 
and  in  all  similar  expressions,  such  words  as  immediately,  at  once,  etc.  are 
entirely  unnecessary.    A  telegram  in  itself  implies  urgency. 

2.  Make  all  messages  as  short  as  possible,  but  clear  and  definite.    A  fixed 
charge  is  made  for  all  messages,  except  those  sent  by  cable,  not  exceeding 
ten  words,  and  for  every  word  in  excess  of  that  number  there  is  an  additional 
charge.    All  charges  are  regulated  somewhat  by  distance. 

3.  No  charge  is  made  for  the  name  and  the  address  of  the  person  who  is 
to  receive  the  message,  or  for  the  name  of  the  sender. 

4  The  sender  of  a  message  should  never  include  his  street  number  when 
writing  his  address.  A  charge  is  made  for  everything  in  the  address  except 
the  name  of  the  city  or  the  town,  the  state,  and  the  date.  If  you  are  not 


xiv  APPENDIX  E 

generally  known  in  a  large  city  or  town,  give  the  sending  operator  your 
street  address,  and  answers  will  be  delivered  promptly  and  no  additional 
charge  made. 

5.  Numbers  should  be  written  in  full,  since  the  charge  is  the  same  for  a 
figure  as  for  a  word;  for  example,  Send  by  fast  freight  20  #1000  mahogany 
library  tables  would  be  counted  as  fourteen  words,  while  Send  fast  freight 
twenty  number  one  thousand  mahogany  library  tables  would  be  counted  as 
ten  words. 

6.  Except  in  a  cable  message,  each  part  of  a  compound  word  is  counted 
as  an  entire  word ;  for  instance,  twenty-five  is  counted  as  two  words. 

7.  Each  initial  of  a  name  is  charged  as  a  separate  word,  but  a  few  abbre- 
viations are  counted  as  one  word,  as  f .  o.  b.,  C.  0.  D.,  A.  M.,  p.  M.,  etc. 

8.  In  cable  messages  a  charge  is  made  for  the  name  and  the  address  of 
the  one  to  whom  the  message  is  sent,  and  for  the  signature  as  well  as  for 
the  message. 

9.  Many  kinds  of  cipher  language  are  used  to  guard  the  secrecy  and 
reduce  the  expense  of  messages.    This  plan  is  found  very  serviceable  when 
the  cost  of  transmission  is  great,  or  when  very  important  matters  are  to  be 
telegraphed  without  giving  information  except  to  those  entitled  to  it.  Almost 
all  cable  messages  are  in  cipher.    To  telegraph  or  cable  in  cipher,  business 
men  employ  what  is  called  a  code,  —  a  system  of  abbreviations  in  which  a 
single  word  stands  for  a  whole  phrase  or  sentence ;  for  example,  Autumn 
might  stand  for  Knoivlton,  Beach  &  Co.,  Butleigh,  Glastonbury,  England,  or 
We  arrived  here  this  morning,  or  any  other  expression  understood  by  both 

the  sender  and  the  receiver  of  a  telegram  or  a  cable  message. 

10.  All  messages  of  importance  should  be  repeated.    For  one  half  the 
original  cost  of  a  telegram  the  sender  of  any  message  can  have  the  receiving 
operator  repeat  it  to  the  operator  who  sent  it.   Errors  in  important  telegrams 
are  in  this  way  avoided. 

11.  Night  messages  are  taken  at  reduced  rates.    These  can  be  sent  at  any 
time  after  6  p.  M.,  but  they  are  not  delivered  until  the  next  morning. 

12.  Night  letters  will  be  received  not  later  than  midnight,  to  be  trans- 
mitted for  delivery  on  the  morning  of  the  next  business  day.    Fifty  words 
or  less  may  be  sent  for  the  day  rate  of  ten  words.    Additional  charges  are 
made  for  more  than  fifty  words. 

13.  Day  letters  will  be  transmitted  at  one  and  one-half  times  the  standard 
night-letter  rate  for  fifty  words  or  less.    Additional  charges  are  made  for 
more  than  fifty  words. 


APPENDIX  F 


THE  FORMATION  OF  PARTNERSHIPS 


The  following  illustrations  apply  to  the  formation  of  partnerships  : 
First,  the  formation  of  a  partnership  on  the  basis  of  equal  investment  by 
each  partner  at  the  beginning  of  the  business. 

The  necessary  entry  is  of  the  simplest  character,  as  follows  : 


Cash 


A,  Investment 

B,  Investment 


4000 


2000 
•2000 


When  posted,  each  partner's  account  will  appear  as  follows  : 

A,  INVESTMENT 


2000 


B,  INVESTMENT 


2000 


Second,  the  formation  of  a  partnership  by  the  individual  proprietor  when 
he  sells  a  half  interest  in  an  established  business. 

A  has  an  established  business  worth  $15,000;  he  sells  J>  a  half  interest 

for '$7500;  thus  B  becomes  an  equal  partner.    The  money  received  by  A  is 

not  a  part  of  the  capital  of  the  new  firm ;  it  is  his  individual  possession,  and 

the  capital  of  the  firm  is  $15,000. 

\  On  A's  books,  as  proprietor,  the  investment  account  appeared  as  follows  : 

A,  INVESTMENT 


19— 

Jan. 

1 

3 

15000 

XVI 


APPENDIX  F 


Under  the  partnership  agreement  one  half  of  this  sum  must  be  credited  to 
each  partner,  and  this  is  accomplished  by  the  following  journal  entry : 


A,  Investment 

B,  Investment 


7500 


When  this  entry  is  posted,  the  accounts  of  the  proprietors,  on  the  books 

formerly  used  by  A,  will  appear  as  follows  : 

• 

A,  INVESTMENT 


19— 

19— 

Jan. 

1 

3 

7500 

Jan. 

1 

3 

15000 

B,  INVESTMENT 

19— 

Jan. 

1 

3 

7500 

Third,  the  formation  of  a  partnership  when  the  incoming  partner  makes 
an  investment  equal  to  the  value  of  the  established  business. 

Illustration :  A  has  a  business  worth  $18,000 ;  B  invests  a  like  sum  and 
becomes  an  equal  partner.  The  money  invested  by  B  is  a  part  of  the  capital 
of  the  firm,  which  is  now  $36,000. 

On  A's  books,  as  proprietor,  the  investment  account  appeared  as  follows  : 

A,  INVESTMENT 


19— 
Jan. 

1 

2 

18000 

The  following  entry  should  be  made  when  B  makes  his  investment : 


Cash 


18000 


isoou 


B,  Investment 

When  this  entry  is  posted,  B's  account,  on  the  books  formerly  used  by  A, 
will  appear  as  follows  : 

B,  INVESTMENT 


19— 

Jan. 

1 

7 

18000 

A's  account  will  remain  unchanged,  and  each  partner  is  now  credited  for 
one  half  of  the  capital  of  the  firm. 

NOTE.  The  cash  items  in  the  illustrations  may  be  entered  in  the  cashbook  ;  the  journal 
entry  has  been  used  simply  to  set  forth  the  debit  and  the  credit  items  more  clearly. 

Only  two  partners  have  been  considered,  but  the  principles  are  the  same  whether  there 
are  two  partners  or  more  than  two,  and  whether  the  investments  are  equal  or  unequal. 


INDEX 


PAGE 

Abbreviations vi 

Acceptance,  definition  of 164 

Account,  or  accounts 

analysis  of 18-20,  30 

closing,  by  balance 52 

C.O.D.  accounts  .    .    .     221,222,248 

definition  of 15 

division  of 

assets 254 

liabilities 254 

proprietary 254 

income 254 

expense 254 

how  to  open 15 

kinds  of 

real 243 

nominal 244 

open 30 

in  full  of  account 5 

on  account 4,  8 

to  apply  on  account 4 

Accounts  payable 

advantages  of 225 

definition  of 63,  224 

Accounts  receivable 

advantages  of 225 

definition  of      63,  224 

Assets,  definition  of 31 

Balance  sheet 

definition  of 31 

form  of 32,  228 

Bank 

commercial 96 

definition  of 96 

opening  an  account  with  ....  96 

Bank  account,  monthly  statement  of, 

100,  113 

Bank  charges  for  notes  and  drafts      .  220 

Bill,  definition  of 60 

Bills  of  lading 

definition  of  .    .    . 180 

description  of 178-180 

how  drawn 180 

illustrations  of 179,  180 

order 213 

Book  of  final  entry ii 

Book  of  original  entry ii 

Bookkeeping 

definition  of i 

double-entry 

cardinal  principle  of     ....  33 

definition  of i 

in  journal  form 11 

purpose  of 31 

single  entry i 

RY  X 


PAGE 

Book  value  defined 227 

Business  statements,  discussion  of  .    .      31 
Business  transactions,  definition  of     .     1,  i 

Calendar  year 120 

Capital,  definition  of 30,  i 

Cash 

definition  of 3 

how  proved 104 

Cash  account,  balancing  the    .    .     .    52,  53 

Cashbook 

closing  of 74 

entries  of,  journalized 72 

explanation  of 71 

illustrations  of, 

72-73.  1)0-91.  128-129,  198-199 
posting  of  . 74,  198-199 

Charge,  meaning  of ii 

Check  book 

checking  stubs  in 115 

comparing,   \\ith   monthly  state- 
ment        178 

description  of 98 

illustration  of 99 

Check  marks 23,  70 

Check  record 

illustration  of 98 

how  kept 97 

Checks 

cash 133 

definition  of 61 

use  of 98 

Closing  the  ledger 

delivery  equipment,  how  closed  .    229 

direct  method 167-170 

insurance,  how  closed 229 

journal  method 36-44 

Collection  and  exchange,  when  charged.  218 

Commercial  terms  defined iii 

Commercial  year Hi* 

Copartnership.    See  Partnership 

Correction  of  errors 55-56 

Credit 5,  6,  10.  14,  15,  134,  172 

Creditor,  definition  of 10 

Dates  in  fractional  form 144 

Debit    .     .    .     .  5,  6.  10,  14,  15,  72,  134,  172 

Debtor,  definition  of 10 

Deposit  ticket  ....  .    .  97,  218 

Deposits 97 

Drafts 
bank 

check  to  purchase 162 

entries  for 163 

form  of 162 

indorsement  of  .  .     163 


xvm 


PRINCIPLES  OF  BOOKKEEPING 


PAGE 

Drafts 

commercial 

definition  of 155 

indorsement  of 156 

parties  to  two-party  draft     .    .  155 

parties  to  three-party  draft  .    .  159 
principles  for  entries    .    .     157,  166 

relation  of  parties 159 

use  of 155 

sight  drafts 

for  collection  of  debts  .    .    .  155 
entries  for  ....     157,  160,  161 

form  of  two-party      ....  156 

form  of  three-party  ....  160 

payable  to  a  bank 158 

payable  to  a  person  or  a  firm, 

*  156,  160 

with  bill  of  lading  attached  .  222 
time  drafts 
acceptance  of     .    .    .    .     164,  166 

entries  for 165 

manner  of  accepting ....  165 

method  of  handling  ....  164 

payable«after  date     ....  164 
payable  after  sight     .    .     164,166 

triangle  illustration 159 

Drawing  account 

closing  of 138 

debit  and  credit  of 134 

form  in  financial  statement .    .    .  138 

why  used 134 

Entry 

compound 64 

simple 64 

Erasures,  avoidance  of 9 

Errors,  correction  of 55 

Exchanges 

applied  to  labor,  or  service  .    .    .  1,  2 

applied  to  promises 1,  2 

applied  to  property 1 

applied  to  use,  or  hire 1,  2 

Expense,  definition  of     ..'....  i 

Face  of  ledger  account 22 

Financial  statement 

discussion  of -31 

form  of 32 

Formation  of  a  partnership     ....  235 

Forms  of  statement,  discussion  of  .    .  57 

Freight  and  cartage  out 223 

Fuel  account,  credit  of 36 

Fundamental  principles 1 

Indorsements 

definition  of 118 

forms  of 113,118,119,163 

object  of 118 

Insolvency,  definition  of 31,  i 

Insurance  policy 209 

Interest 

how  computed 119 

definition  of i 

entries  of 120 

legal  rate 119 


Interest  earned 65,  66,  69 

Interest  paid 65,  66 

Inventory 

definition  of 28,  i 

fuel 36 

merchandise 30,  79 

office  supplies 36 

how  recorded 28 

sundry  expense      ....    48,  63,  171 
how  taken 28 

Invoice 

checking  of 109,  110 

definition  of 60,  ii 

illustrations  of  .    .    .      60,  62,  102,  109 

of  purchase 24 

of  sale 24 

terms  of 132,  136,  212 

Journal 

analysis  of 13-14 

definition  of ii 

illustrations  of 12-13,  89 

Journalizing 

definition  of 6 

rules  for 14,  15,  ii 

Ledger 

analysis  of 18,  19,  20 

definition  of 15,  ii 

illustrations  of  ....      16-17,  92-93 

index  of 225 

lists  of  accounts  in,  order  of, 

63,  79,  114,  137,  224 
model  for  closing 40-41 

Ledger  titles 208 

Letters 

of  remittance    ....      211-212,  viii 
ordering  goods 209-210 

Liabilities,  definition  of 31 

Losses,  how  sustained 33 

Memoranda  of  orders 239 

Memorandum 10 

Merchandise,  definition  of  .    .    .    .  3,  19,  i 
Merchandise  accounts,  closing  of, 

37-39,  167-169 

Merchandise  discount 144,  216 

Merchandise  inventory  account  .    .    19,  79 
Merchandise  purchases  account ...      20 

Merchandise  sales  account 19 

Monthly  statement 

of  depositor's  account 100 

of  open-ledger  account     .    .    177,  225 

Negotiable  paper,  maturity  of     ...    120 

Net  loss,  definition  of 31 

Net  profit,  definition  of 31 

Notebook 

definition  of ii 

illustration  of 196-197 

proof  of 226 

Notes,  promissory 

acceptance 164 

cancellation  of 122, 146 

discount  of 182 

RY 


INDEX 


xix 


Notes,  promissory 

explanation  of 6,  7,  103 

interest-bearing 103,  181 

joint 181 

joint  and  several 181 

kinds  of 181 

partial  payment  of 183 

prepayment  of 146 

as  property 30 

renewal  of 183 

written  forms 6,  103 

Notes  payable,  definition  of    ....    6,  i 

Notes  payable  account 

balance  of 19 

credits  and  debits  of 19 

Notes  receivable,  definition  of     .    .    .    6,  i 

Notes  receivable  account 

balance  of 18 

debits  and  credits  of 18 

Office  furniture 66 

Omission  of  cents 15 

Opening  double-entry  books 

illustration  of 194 

principles  of 193 

Opening  journal  entries  .    .    .     64,  76,  84, 

230,  231 

Operating  statement 31 

Partnership,  or  copartnership 

arrangements 256 

articles  of ix 

clauses 128 

definition  of 128 

dissolution 

consequences  of 252 

notice  of 253 

essential  elements 233 

formation  of xv 

in  Set  IV,  May 128 

in  Set  V,  August 233 

Pass  book 97,  98,  100 

Pencil  footings 18 

Personal  accounts 

credit  balance  shows 19 

credits  show 18,  33 

debit  balance  shows 19 

debits  show 18,  33 

definition  of 18 

monthly  statement  of   .    .    .     177,178 

noncollectible 33 

Posting 

definition  of 15,  i 

of  model  journal 20,  21 

omitting  ditto  marks  in    ....      23 

Power  of  attorney x 

Present  worth,  definition  of    .    .    .    .  30,  i 
Price  lists,  59,  75,  106-107, 130-131, 200-204 
Principles  of  debit  and  credit,  sum- 
mary of 14 

Profit  and  loss,  determination  of  .  .  29 
Profit  and  loss  accounts,  summary  of  33 
Profit  and  loss  statement 

form  of 32 

results  of  .  31 


PAGE 

Profits,  how  realized 33 

Proprietary  interest 19,  30,  31 

Proprietor's  account 

closing  of 44,  170 

definition  of 19 

Protest 

certificate  of xi 

notice  of xii 

Purchase  book 

definition  of 86 

entries  in 214 

entries  of,  journalized 86 

form  of 89 

how  record 197 

illustration  of 89 

posting  of 93 

Receipt 

definition  of i 

form  of 4,  102 

Rechecking 23 

Red  ink,  uses  of 52 

Rent  paid  account 20 

Resources,  definition  of 31 

Reverse  stub 98 

Salary  account 20 

Sales  book 

definition  of 86 

entries  of,  journalized 86 

illustration  of 90-91 

posting  of 93 

Script  illustrations 

balance  sheet 32 

bank  draft 162 

bills  of  lading 179,  180 

cashbook    .......      72-73,  90-91 

check 61, 77 

check  to  purchase  bank  draft  .  .  162 
commercial  drafts 

entries  for      .  157,160,  161,  163,  165 

payable  after  date 164 

payable  after  sight 166 

sight  draft      .    .    .  156,  158,  160.  161 

time  draft 104.16(5 

correction  of  errors 56 

daily  cash  proof    ....'...    104 

deposit  ticket 97 

discount  memorandum     .    .    .    .    219 

financial  statement 32 

forwarding  by  balance  ....  53 
forwarding  by  footings  ....  53 
indorsements  ....  113.118.110 

invoices 60.  62,  102,  109 

ledger  accounts  that  balance    .    .      28 

ledger  rulings 37 

model  check  book 99 

model  journal 12-13.  89 

model  ledger     ....      16-17,  92-93 

model  ledger  closed 40-41 

model  trial  balance 22,  91 

monthly  statement  of  account      .    177 

notes 6,61,75,103,112 

profit  and  loss  statement  ....  32 
purchase  book 89 


XX 


PRINCIPLES  OF  BOOKKEEPING 


Script  illustrations 

receipts 4,  102 

rechecking 23 

sales  book 90,  91 

signature  card 96 

working  sheet 58 

Signature  card 96,  97 

Solvency i 

Statements 

financial 31-32.  228 

profit  and  loss 31-32,  227 

Suggestions  for  ruling      ....      8,  9,  37 

Summary  of  principles 14,  ii 

Sundry  expense  inventory  ....    48,  63 


PAGE 

Telegrams,  use  of xiii 

Term  of  discount 219 

Trade  discount 184 

Trading  statement 227 

Trial  balance 

of  balances 22,  91 

definition  of 22 

to  find  errors  in 106 

of  totals  22 


Voucher,  definition  of , 


Writing  business  forms 


127,  148 


RY 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

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This  book  is  DUE  on  the  last  date  stamped  below. 


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